Coca-Cola Enterprises Inc. CCE announced that the SEC has declared the Registration Statement of Coca-Cola European Partners Limited (“CCEP”) effective. CCEP will be formed with the merger of three European bottlers of The Coca-Cola Company KO, including Coca-Cola Enterprises.

Last year, Coca-Cola Enterprises announced that it will merge with two other European bottlers of Coca-Cola — Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke AG — to form a Western European bottler, CCEP. Coca-Cola Enterprises will hold 48% stake, while Coca-Cola will own 18% in the new bottling company. CCEP will be the largest independent Coca-Cola bottler in terms of revenues. The transaction is expected to close by the end of second-quarter 2016.

A special shareholders’ meeting will be held on May 24 to approve the transaction. We believe that Coca-Cola Enterprises’ merger with the other European bottlers should boost its shareholder returns.

Coca-Cola has been divesting and merging many bottling operations in many international markets since 2014 to revamp its bottling system and thereby improve margins and drive growth. Additionally, the company entered into an agreement with beer and beverage company, SABMiller, and partner Gutsche Family Investments, to merge their bottling operations in Southern and East Africa and form the largest Coca-Cola bottling entity in Africa. Coca-Cola will have 11% stake in the new African bottler. In China, it has agreed to refranchise the company-owned bottling operations to its existing partners, COFCO and Swire.

Coca-Cola Enterprises is a strategic western European bottler of Coca-Cola and has a 10-year bottling agreement with the latter, ending on Oct 2, 2020, for each of its territories.

Coca-Cola has a Zacks Rank #3 (Hold) and Coca-Cola Enterprises has a Zacks Rank #2 (Buy). Stocks worth considering in the beverage sector are Primo Water Corporation PRMW and Cott Corporation COT. While Primo Water sports a Zacks Rank #1 (Strong Buy), Cott has the same Zacks Rank as Coca-Cola Enterprises.

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