Central European Distribution Corporation (CEDC) has agreed to sell its drinks distribution business in Poland to wholesale distributor Eurocash SA for PLN400m (US$138m) cash.

The sale, announced today (9 April), has been made on a debt free, cash free basis, subject to potential price adjustments and Polish anti-trust approval, CEDC announced.

In addition, the company has signed a six-year agreement with Eurocash for the distribution of CEDC's portfolio of own brands and exclusive import brands in Poland.

The distribution agreement contains provisions such as minimum inventory levels, commercial terms including pricing and discounts, and other promotional programmes.

Closing of the transaction is expected during the beginning of the third quarter.

William Carey, president and CEO of CEDC, said: "As part of our continuing strategy to concentrate our efforts on our portfolio of own brands and imported brands, we have taken the decision to divest our wholesale distribution business in Poland, through this sale to Eurocash, which we believe will be an excellent home to our strong team of employees working in distribution.

"The portfolio of our own brands and imported brands that will be distributed by Eurocash represents approximately 20%-30% of our ongoing sales in Poland, and we believe the distribution agreement we signed with Eurocash ensures stability of ongoing sales, promotions, inventory levels, cash flow and other key commercial elements,” he added.

CEDC earlier this year reported a return to profits for its 2009 full-year, but the drinks group has lowered sales and earnings guidance for 2010.