TIDMCCEP
RNS Number : 9603V
Coca-Cola European Partners plc
20 April 2021
Coca-Cola European Partners plc ("CCEP") is disclosing the
following unaudited pro forma condensed combined financial
information prepared in connection with proposed financings of the
Coca-Cola Amatil Limited (CCL) acquisition by CCEP.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
In November 2020, CCEP and Coca-Cola Amatil Limited ("CCL")
entered into a binding Scheme Implementation Deed for the
acquisition of 69.2% of the entire existing issued share capital of
CCL, held by shareholders other than The Coca-Cola Company ("TCCC")
for A$12.75 per share in cash less the second half 2020 dividend of
A$0.18 per share declared by CCL on 18 February 2021 ("2H20
Dividend"), pursuant to a scheme of arrangement (the "Scheme"). CCL
is one of the largest bottlers and distributors of ready to drink
non-alcoholic and alcoholic beverages and coffee in the Asia
Pacific region and is the authorized bottler and distributor of
TCCC's beverage brands in Australia, New Zealand, Fiji, Indonesia,
Papua New Guinea and Samoa.
CCEP made a further, best and final, offer in February 2021 in
which it increased the Scheme consideration to A$13.50 per share in
cash less the 2H20 Dividend.
CCEP has also entered into a Co-operation and Sale Deed with
TCCC (the "Co-operation Agreement") which is conditional upon the
implementation of the Scheme. Under the Co-operation Agreement,
CCEP will acquire 10.8% of CCL shares from TCCC for A$9.57 per
share in cash less the 2H20 Dividend and can acquire the remaining
20% of CCL's shares held by TCCC for A$10.75 per share less the
2H20 Dividend, either in cash or a combination of cash and the
issue of CCEP shares at an agreed conversion ratio. In March 2021,
in accordance with the Co-operation Agreement, CCEP elected to
purchase the remaining 20% of CCL's shares held by TCCC for
cash.
The Scheme and the Co-operation Agreement are referred to herein
as the "Acquisition".
The Acquisition will be accounted for as a business combination
using the acquisition method of accounting in accordance with
International Financial Reporting Standards ("IFRS"). Accordingly,
CCL's assets to be acquired and liabilities to be assumed have been
adjusted based on preliminary estimates of fair value.
The following unaudited pro forma condensed combined financial
information and related notes (the "Pro Forma Financial
Information") is based on the historical consolidated financial
statements of CCEP and the historical financial statements of CCL
and has been prepared to reflect the Acquisition. The Acquisition
together with the related financing are together referred to as the
"Transaction." The pro forma adjustments related to the Transaction
include:
- The acquisition of 100% of CCL by CCEP;
- Reflecting the assets, liabilities, and non-controlling interests of
CCL at their preliminary estimated fair values;
- Proceeds and use of financings. Refer to Note 4 of the Pro Forma Financial
Information; and,
- The translation of CCL's financial information from Australian Dollars
("AUD" or A$) to Euros ("EUR" or EUR).
The Pro Forma Financial Information is derived from and should
be read in conjunction with the most recent historical financial
statements of CCEP and CCL. For both CCEP and CCL this is financial
information as at and for the year ended 31 December 2020. The
historical financial statements and related notes thereto of CCEP
are filed with the US Securities and Exchange Commission as part of
CCEP's Annual Report on Form 20-F for the year ended 31 December
2020. The historical financial statements and related notes thereto
of CCL can be found on CCL's website at
https://www.ccamatil.com/au/Investors/Financial-reporting and are
not incorporated by reference herein or form a part hereof.
The unaudited pro forma condensed combined income statement for
the year ended 31 December 2020 (the "Pro Forma Income Statement")
gives effect to the Acquisition as if it had occurred on 1 January
2020, while the unaudited pro forma condensed combined statement of
financial position at 31 December 2020 (the "Pro Forma Statement of
Financial Position") gives effect to the Acquisition as if it had
occurred on 31 December 2020.
The Pro Forma Financial Information has not been prepared in
accordance with the requirements of Regulation S-X of the US
Securities Act of 1933, the Prospectus Regulation, or any generally
accepted accounting standards. Refer to Note 1 of the Pro Forma
Financial Information.
The Pro Forma Financial Information has been prepared in order
to illustrate the effects of the Acquisition on the financial
position and results of operations of CCEP. It is based on
information and assumptions that CCEP believes are reasonable,
including assumptions regarding the terms of the Acquisition. The
Pro Forma Financial Information has been prepared for illustrative
purposes only and because of its nature, addresses a hypothetical
situation. It does not intend to represent what CCEP's financial
position or results of operations actually would have been if the
Acquisition had been completed on the dates indicated, nor does it
intend to represent, predict or estimate the results of operations
for any future period or financial position at any future date. In
addition, it does not reflect ongoing cost savings that CCEP
expects to achieve as a result of the Acquisition or the costs
necessary to achieve these cost savings or synergies. As pro forma
information is prepared to illustrate retrospectively the effects
of transactions that will occur in the future, there are
limitations that are inherent to the nature of pro forma
information. As such, had the Acquisition taken place on the dates
assumed above, the actual effects would not necessarily have been
the same as those presented in the Pro Forma Financial
Information.
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2020
Transaction Accounting Adjustments
------------------------------------------------------------------------------
Intangible
Inventory Fixed asset asset Transaction
Adjusted fair value depreciation amortization and related Total Financing CCEP pro
(in EUR millions, Historical CCL adjustment adjustment adjustment costs acquisition Adjustments forma
except where specified) CCEP (Note 2) (Note 3(b)) (Note 3(b)) (Note 3(b)) (Note 3(b)) adjustments (Note 4) combined
----------------------- ---------- -------- ----------- ------------ ------------ ----------- ----------- ----------- --------
Revenue 10,606 2,929 - - - - - - 13,535
Cost of sales (6,871) (1,737) (29) (9) - - (38) - (8,646)
------------------------ ---------- -------- ----------- ------------ ------------ ----------- ----------- ----------- --------
Gross Profit 3,735 1,192 (29) (9) - - (38) - 4,889
Operating expenses (2,922) (1,022) - (2) (21) (92) (115) - (4,059)
------------------------ ---------- -------- ----------- ------------ ------------ ----------- ----------- ----------- --------
Operating profit 813 170 (29) (11) (21) (92) (153) - 830
Finance income 33 20 - - - - - - 53
Finance costs (144) (57) - - - (4) (4) (34) (239)
------------------------ --------
Total finance costs, net (111) (37) - - - (4) (4) (34) (186)
Non-operating items (7) (2) - - - - - - (9)
------------------------ ---------- -------- ----------- ------------ ------------ ----------- ----------- ----------- --------
Profit before taxes 695 131 (29) (11) (21) (96) (157) (34) 635
Taxes (197) (44) 8 3 6 28 45 10 (186)
------------------------ ---------- -------- ----------- ------------ ------------ ----------- ----------- ----------- --------
Profit after taxes 498 87 (21) (8) (15) (68) (112) (24) 449
Profit attributable to
shareholders 498 109 (21) (8) (15) (68) (112) (24) 471
Profit attributable to
non-controlling
interests - (22) - - - - - - (22)
------------------------ --------
Profit after taxes 498 87 (21) (8) (15) (68) (112) (24) 449
======================== ========== ======== =========== ============ ============ =========== =========== =========== ========
(per share information
in EUR)
Basic earnings per
share: 1.09 0.99
Diluted earnings per
share: 1.09 0.98
(share information in
millions)
Basic weighted average
number of shares 455 455
Diluted weighted average
number of shares 456 456
The accompanying notes are an integral part of this unaudited
pro forma condensed combined financial information.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL
POSITION
AS OF 31 DECEMBER 2020
Transaction Accounting Adjustments
---------- ---------- ---------------------------------------------------- ---------
Preliminary
purchase
consideration Transaction CCEP
Adjusted and and related Total Financing total pro
Historical CCL allocation costs acquisition Adjustments forma
(in EUR millions) CCEP (Note 2) (Note 3(a)) (Note 3(b)) adjustments (Note 4) combined
------------------ ---------- ---------- ------------- ----------- ----------- ----------- ---------
ASSETS:
Non-current:
Intangible assets 8,414 667 3,754 - 3,754 - 12,835
Goodwill 2,517 80 2,409 - 2,409 - 5,006
Property, plant and
equipment 3,860 1,206 94 - 94 - 5,160
Non-current
derivative assets 6 71 - - - - 77
Deferred tax assets 27 5 - - - - 32
Other non-current
assets 337 61 - - - - 398
------------------- ---------- ---------- ------------- ----------- ----------- ----------- ---------
Total non-current
assets 15,161 2,090 6,257 - 6,257 - 23,508
------------------- ---------- ---------- ------------- ----------- ----------- ----------- ---------
Current:
Current derivative
assets 40 13 - - - - 53
Current tax assets 19 6 - - - - 25
Inventories 681 356 29 - 29 - 1,066
Amount receivable
from related
parties 150 33 - - - - 183
Trade accounts
receivable 1,439 504 - - - - 1,943
Other current
assets 224 154 - - - - 378
Cash and cash
equivalents 1,523 630 (5,766) (96) (5,862) 5,221 1,512
------------------- ---------- ---------- ------------- ----------- ----------- ----------- ---------
Total current
assets 4,076 1,696 (5,737) (96) (5,833) 5,221 5,160
------------------- ------------- ----------- ----------- ----------- ---------
Total assets 19,237 3,786 520 (96) 424 5,221 28,668
=================== ========== ========== ============= =========== =========== =========== =========
LIABILITIES:
Non-current:
Borrowings, less
current portion 6,382 1,311 - - - 4,721 12,414
Employee benefit
liabilities 283 36 - - - - 319
Non-current
provisions 83 - - - - - 83
Non-current
derivative
liabilities 15 75 - - - - 90
Deferred tax
liabilities 2,134 143 1,215 - 1,215 - 3,492
Non-current tax
liabilities 131 - - - - - 131
Other non-current
liabilities 44 - - - - - 44
------------------- -----------
Total non-current
liabilities 9,072 1,565 1,215 - 1,215 4,721 16,573
------------------- ---------- ---------- ------------- ----------- ----------- ----------- ---------
Current:
Current portion of
borrowings 805 253 - - - 500 1,558
Current portion of
employee benefit
liabilities 13 51 - - - - 64
Current provisions 154 - - - - - 154
Current derivative
liabilities 62 40 - - - - 102
Current tax
liabilities 171 20 - - - - 191
Amounts payable to
related parties 181 87 - - - - 268
Trade and other
payables 2,754 763 - - - - 3,517
------------------- -----------
Total current
liabilities 4,140 1,214 - - - 500 5,854
------------------- ---------- ---------- ------------- ----------- ----------- ----------- ---------
Total liabilities 13,212 2,779 1,215 - 1,215 5,221 22,427
=================== ========== ========== ============= =========== =========== =========== =========
EQUITY
Share capital 5 1,179 (1,179) - (1,179) - 5
Share premium 192 - - - - - 192
Merger reserves 287 - - - - - 287
Other reserves (537) 121 (121) - (121) - (537)
Retained earnings 6,078 (490) 490 (96) 394 - 5,982
------------------- -----------
Equity attributable
to shareholders 6,025 810 (810) (96) (906) - 5,929
------------------- ---------- ---------- ------------- ----------- ----------- ----------- ---------
Non-controlling
interests - 197 115 - 115 - 312
Total equity 6,025 1,007 (695) (96) (791) - 6,241
=================== ========== ========== ============= =========== =========== =========== =========
The accompanying notes are an integral part of this unaudited
pro forma condensed combined financial information.
Note 1. Basis of preparation
The Pro Forma Financial Information set forth herein is based
upon the historical financial statements of CCEP and CCL and has
been prepared to illustrate the effects of the Transaction as if it
had occurred on:
- 1 January 2020 in respect of the Pro Forma Income Statement; and,
- 31 December 2020 in respect of the Pro Forma Statement of Financial Position.
The Pro Forma Financial Information is presented for
illustrative purposes only and does not necessarily reflect the
results of operations or the financial position that actually would
have resulted had the Acquisition occurred at the dates indicated,
or project the results of operations or financial position for any
future dates or periods.
The Acquisition will be accounted for as a business combination
using the acquisition method of accounting in accordance with IFRS.
Accordingly, CCL's assets to be acquired and liabilities to be
assumed have been adjusted based on preliminary estimates of fair
value. Any excess of the purchase price over the fair value of
identified assets acquired and liabilities assumed will be
recognized as goodwill. The actual fair values will be determined
upon the consummation of the Acquisition and may vary from these
preliminary estimates.
The Pro Forma Financial Information does not reflect the cost of
any integration activities or benefits from the Acquisition,
including potential synergies that may be generated in future
periods.
The historical financial statements of CCEP are prepared in
accordance with IFRS and are presented in Euros. The historical
financial statements of CCL are prepared in accordance with
Australian Accounting Standards, which complies with IFRS and are
presented in Australian Dollars. The Pro Forma Financial
Information includes reclassifications and adjustments to conform
CCL's historical accounting presentation to CCEP's accounting
presentation, in each case for the relevant periods. The CCL income
statement has been translated from Australian Dollars to Euros
using the average monthly exchange rates for the periods of 0.6036.
The CCL balance sheet has been translated from Australian Dollars
to Euros using exchange rate at 31 December 2020 of 0.6184.
The estimated income tax impacts of the pre-tax adjustments that
are reflected in the Pro Forma Financial Information are calculated
using an estimated blended statutory rate of 29%, based upon the
annual period ending 31 December 2020. The blended statutory rate
and the effective tax rate of the combined group could be
significantly different depending on the post-transaction
activities and geographical mix of profit before tax.
Note 2: Adjustments to CCL's financial statements
The financial statements below illustrate the impact of
adjustments made to CCL's financial statements in order to present
them on a basis consistent with CCEP's accounting policies under EU
IFRS. These adjustments reflect CCEP's best estimates based upon
the information currently available to CCEP and could be subject to
change once more detailed information is obtained. The CCL
financial information has been adjusted to:
- Present CCL's financial information on a basis consistent with the accounting
policies adopted by CCEP; and
- Translate from Australian Dollars to Euros, which is the presentation
currency of CCEP.
U NAUDITED ADJUSTED CCL INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2020
Adjusted
Reclassifications CCL
Historical
CCL AUD (A$) Adjusted CCL EUR (EUR)
(in millions) AUD (A$) (Note 2(a)) AUD (A$) (Note 2(b))
--------------------------------------- ---------- ----------------- ------------ -------------
Revenue - 4,853 4,853 2,929
Trading revenue 4,762 (4,762) - -
Cost of sales - (2,877) (2,877) (1,737)
Cost of goods sold (2,862) 2,862 - -
Delivery (221) 221 - -
------------------------------------------- ---------- ----------------- ------------ -------------
Gross profit 1,679 297 1,976 1,192
Other revenues 39 (39) - -
Operating expenses (1,438) (256) (1,693) (1,022)
Operating profit 280 3 283 170
Finance income 33 - 33 20
Finance costs (95) - (95) (57)
------------------------------------------- ---------- ----------------- ------------ -------------
Total finance costs, net (62) - (62) (37)
Non-operating items - (3) (3) (2)
------------------------------------------- ---------- ----------------- ------------ -------------
Profit before tax 218 - 218 131
------------------------------------------- ---------- ----------------- ------------ -------------
Taxes - (73) (73) (44)
Income tax expense (73) 73 - -
------------------------------------------- ---------- ----------------- ------------ -------------
Profit after tax 145 - 145 87
------------------------------------------- ---------- ----------------- ------------ -------------
Profit attributable to shareholders - 180 180 109
Attributable to shareholders of
Coca-Cola Amatil Limited 180 (180) - -
Profit attributable to non-controlling
interests (35) - (35) (22)
------------------------------------------- ---------- ----------------- ------------ -------------
Profit after tax 145 - 145 87
------------------------------------------- ---------- ----------------- ------------ -------------
UNAUDITED ADJUSTED CCL BALANCE SHEET
AS OF 31 DECEMBER 2020
Adjusted
Reclassifications CCL
Historical Adjusted
CCL AUD (A$) CCL EUR (EUR)
(Note
(in millions) AUD (A$) (Note 2(a)) AUD (A$) 2(b))
------------------------------- ---------- ----------------- ---------- -----------
ASSETS:
Non-current:
Intangible assets 1,208 (130) 1,078 667
Goodwill - 130 130 80
Investments 61 (61) - -
Defined benefit superannuation
plans 7 (7) - -
Property, plant and equipment 1,519 432 1,951 1,206
Right of use assets 432 (432) - -
Non-current derivative
assets - 115 115 71
Derivatives 115 (115) - -
Deferred tax assets 8 - 8 5
Other non-current assets - 99 99 61
Other receivables 1 (1) - -
Prepayments 18 (18) - -
Loans receivable interest
bearing 12 (12) - -
------------------------------- ---------- ----------------- ---------- -----------
Total non-current assets 3,381 - 3,381 2,090
Current:
Current derivative assets - 22 22 13
Derivatives 22 (22) - -
Other financial assets
at amortised cost 37 (37) - -
Current tax assets 10 - 10 6
Inventories 576 - 576 356
Amount receivable from
related parties - 53 53 33
Trade accounts receivable - 815 815 504
Trade and other receivables 964 (964) - -
Other current assets - 249 249 154
Other financial assets 30 (30) - -
Prepayments 86 (86) - -
Cash and cash equivalents - 1,018 1,018 630
Cash assets 1,018 (1,018) - -
------------------------------- ---------- ----------------- ---------- -----------
Total current assets 2,743 - 2,743 1,696
------------------------------- ---------- ----------------- ---------- -----------
Total assets 6,124 - 6,124 3,786
=============================== ========== ================= ========== ===========
UNAUDITED ADJUSTED CCL BALANCE SHEET
AS OF 31 DECEMBER 2020
Adjusted
Reclassifications CCL
Historical Adjusted
CCL AUD (A$) CCL EUR (EUR)
(Note
(in millions) AUD (A$) (Note 2(a)) AUD (A$) 2(b))
------------------------------------ ---------- ----------------- ---------- -----------
LIABILITIES
Non-current
Borrowings, less current
portion - 2,120 2,120 1,311
Borrowings 1,693 (1,693) - -
Lease liabilities 427 (427) - -
Employee benefit liabilities - 59 59 36
Employee benefits provisions 11 (11) - -
Defined benefit superannuation
plans 48 (48) - -
Non-current derivative liabilities - 122 122 75
Derivatives 122 (122) - -
Deferred tax liabilities 231 - 231 143
---------- ----------------- ---------- -----------
Total non-current liabilities 2,532 - 2,532 1,565
Current:
Current portion of borrowings - 409 409 253
Borrowings 336 (336) - -
Lease liabilities 73 (73) - -
Current portion of employee
benefit liabilities - 82 82 51
Employee benefits provisions 82 (82) - -
Current derivative liabilities - 65 65 40
Derivatives 65 (65) - -
Current tax liabilities 33 - 33 20
Amounts payable to related
parties - 141 141 87
Trade and other payables 1,295 (60) 1,235 763
Other financial liabilities 81 (81) - -
------------------------------------ ---------- ----------------- ---------- -----------
Total current liabilities 1,965 - 1,965 1,214
------------------------------------ ---------- ----------------- ---------- -----------
Total liabilities 4,497 - 4,497 2,779
==================================== ========== ================= ========== ===========
EQUITY
Share capital 1,919 (13) 1,906 1,179
Treasury shares (13) 13 - -
Other reserves - 194 194 121
Reserves 194 (194) - -
Retained earnings - (792) (792) (490)
Accumulated losses (792) 792 - -
------------------------------------ ---------- ----------------- ---------- -----------
Equity attributable to shareholders 1,308 - 1,308 810
Non-controlling interests 319 - 319 197
------------------------------------
Total equity 1,627 - 1,627 1,007
==================================== ========== ================= ========== ===========
(a) Preliminary pro forma classification adjustments have been
made to CCL's income statement and balance sheet in order to
present them on a basis consistent with CCEP. These adjustments
have not changed CCL's profit for the year, total assets or total
liabilities. These adjustments reflect CCEP's best estimates based
upon information currently available to CCEP and could be subject
to change once more detailed information is obtained.
(b) The CCL income statement has been translated from Australian
Dollars to Euros using the average monthly exchange rates for the
periods of 0.6036. The CCL balance sheet has been translated from
Australian Dollars to Euros using exchange rate at 31 December 2020
of 0.6184.
Note 3: Transaction accounting adjustments - acquisition
(a) Preliminary purchase consideration and allocation
The Acquisition is reflected in the Pro Forma Financial
Information as being accounted for under the acquisition method in
accordance with IFRS 3 - Business Combinations. Under this method
the CCL assets acquired and liabilities assumed have been recorded
on preliminary estimates of fair value. The final fair values will
be determined upon the consummation of the Acquisition and may vary
materially from these preliminary estimates.
The estimated purchase consideration, estimated fair values and
residual goodwill are as follows:
Description
(in EUR millions, except where specified) Amount
--------
Consideration to public shareholders pursuant
to the Scheme (in AUD) 6,673
Consideration to TCCC (in AUD) 2,265
----------------------------------------------- --------
Total purchase consideration (in AUD) 8,938
----------------------------------------------- --------
Total purchase consideration (in EUR) 5,766
Allocation of purchase consideration:
Net working capital (excluding inventory) 126
Inventory 385
Intangible assets 4,421
Property, Plant, and Equipment 1,300
Other non-current assets 132
Other non-current liabilities (1,422)
Fair value of noncontrolling interests (312)
Deferred taxes, net (1,353)
--------
Residual goodwill 2,489
Less CCL's historical goodwill (80)
----------------------------------------------- --------
Goodwill adjustment 2,409
----------------------------------------------- --------
The preliminary allocation has been made based on limited access
to information. CCEP will not have sufficient information to make
final allocations until after the completion of the
Acquisition.
The final determination of the accounting for the Acquisition is
anticipated to be completed as soon as practicable after the
completion of the Acquisition. CCEP anticipates that the valuations
of the assets acquired and liabilities assumed in the Acquisition
will include, but not be limited to, inventory, property, plant and
equipment, intangible assets and borrowings. The valuations will
consist of physical appraisals, discounted cash flow analyses or
other appropriate valuation techniques to determine the fair value
of the assets acquired and liabilities assumed.
The final consideration and amounts allocated to assets acquired
and liabilities assumed in the Acquisition could differ materially
from the preliminary amounts presented in the Pro Forma Financial
Information. A decrease in the fair value of assets acquired or an
increase in the fair value of liabilities assumed in the
Acquisition from those preliminary valuations presented in the Pro
Forma Financial Information would result in an increase in the
amount of goodwill that will result from the Acquisition. In
addition, if the value of the assets acquired is higher than the
preliminary indication, it may result in higher amortization and
depreciation expense than is presented in the Pro Forma Financial
Information.
(i) Consideration
The total cash consideration was translated from AUD to Euro
using the 31 March 2021 exchange rate of 0.64516. The actual
purchase consideration will be determined upon completion of the
Acquisition.
(ii) Inventory
The preliminary estimates of the fair value of inventory
acquired is based on key assumptions and have been developed using
publicly disclosed information for other acquisitions in the
industry, CCEP's historical experience, data that were available in
the public domain and CCEP's due diligence review of the business
of CCL. These estimates will be finalized following completion of
the Acquisition and additional values, if any, assigned to
inventory.
The fair value of CCL inventory on hand has been estimated as
EUR356 million, representing a fair value uplift related to
finished goods inventory from their historical costs of EUR29
million which is expected to be recognized within cost of sales
within the first year following the close of the transaction.
This adjustment has been tax affected using a blended statutory
rate of 29% for the Pro Forma Income Statement.
(iii) Intangible assets
The preliminary estimates of the intangible assets acquired are
based on key assumptions and have been developed using publicly
disclosed information for other acquisitions in the industry,
CCEP's historical experience, data that were available in the
public domain and CCEP's due diligence review of the business of
CCL. These estimates will be finalized following completion of the
Acquisition and additional values, if any, assigned to CCL customer
relationships or other identifiable intangible assets acquired.
The fair value and weighted average estimated useful life of
identifiable intangible assets are estimated as follows:
Description
(in EUR millions) Fair value Weighted-average estimated useful life Annual amortization
----------- --------------------------------------- --------------------
Distribution rights, brand names and
trademarks 3,902 Indefinite -
Other acquired identifiable intangible
assets 436 20 22
-----------
Total acquired identifiable intangible
assets (excluding software and other
intangibles) 4,338 22
--------------------
Less CCL's book value of intangible
assets (excluding software and other
intangibles) (584)
-----------
Adjustment to intangible assets, net 3,754
===========
Based on the estimated fair values of identified intangible
assets and the weighted average useful lives, the following
adjustment to amortization expense (recognized within
administrative expense) and associated income tax adjustments have
been included in the Pro Forma Income Statement:
Description
Year ended
31 December
(in EUR millions) 2020
-------------
Amortization of identified intangible assets 22
Less: CCL's intangible amortization per 31 December 2020 accounts
(excluding software and other intangibles) (1)
-------------
Adjustment to amortization expense 21
=============
These adjustments have been tax affected using a blended
statutory rate of 29% for the Pro Forma Income Statement.
(iv) Property, plant and equipment
The preliminary estimates of the property, plant and equipment
assets acquired are based on key assumptions and have been
developed using publicly disclosed information for other
acquisitions in the industry, CCEP's historical experience, data
that were available in the public domain and CCEP's due diligence
review of the business of CCL. These estimates will be finalized
following completion of the Acquisition and additional values, if
any, will be quantified.
The fair value and weighted average estimated remaining useful
life of property, plant and equipment, excluding right of use
assets, have been estimated as EUR1.03 billion (representing a fair
value uplift of EUR94 million) and 7 years, respectively.
Based on the estimated fair values of property, plant and
equipment, excluding right of use assets, and the weighted average
remaining useful lives, an adjustment of EUR11 million has been
recorded as an increase to depreciation expense.
These adjustments have been tax affected using a blended
statutory rate of 29% for the Pro Forma Income Statement.
(v) Non-controlling interests
The fair value of the non-controlling interest assumed
represents the value recognized in CCL's 31 December 2020
consolidated balance sheet of EUR197 million increased by a fair
value adjustment of EUR115 million to EUR312 million. This fair
value adjustment represents the estimated enterprise value at the
acquisition date that is attributable to non-controlling interests,
inclusive of the associated deferred tax impact.
(vi) Deferred tax liabilities
The total net deferred tax liability is estimated to be EUR1.35
billion, or a net increase of EUR1.21 billion. The net increase
results from fair value adjustments related to intangible assets
and property, plant and equipment discussed above.
(b) Transaction and related costs
Reflects the accrual of non-recurring costs of EUR96 million
related to the Acquisition, including, among others, fees paid for
financial advisors, legal services, professional accounting
services, and temporary financing related to the transaction. These
costs are not reflected in the historical consolidated balance
sheets of CCEP and CCL, but are reflected in the Pro Forma
Statement of Financial Position, as a decrease to cash and cash
equivalents and a corresponding decrease to retained earnings, and
in the Pro Forma Income Statement for the year ended 31 December
2020, within operating expenses and finance costs as they will be
expensed by CCEP and CCL as incurred. These costs are not expected
to be incurred in any period beyond 12 months from the closing date
of the Acquisition.
The adjustment to the Pro Forma Income Statement has been tax
affected using a blended statutory rate of 29% for the Pro Forma
Income Statement.
Note 4: Transaction related adjustments - financing
CCEP intends to borrow approximately EUR5.2 billion to fund the
Acquisition. For purposes of this unaudited pro forma condensed
combined financial information, CCEP has assumed that the new CCEP
financing will consist of 4.7 billion Euro equivalent aggregate
principal of Senior Notes, being a mix of Euro and USD denominated
borrowings, and EUR500 million of short term financing of
commercial paper. The USD denominated borrowings will be swapped
into Euros using cross currency swaps. For the purposes hereof, the
new funds raised are assumed to be used for the Acquisition and
costs and expenses of the Acquisition. The amount and type of
financing could be different from that presented in these pro forma
condensed combined financial statements.
Description
(in EUR millions) Amount
Proceeds from commercial paper program 500
-------
Pro forma adjustment to current
portion of borrowings 500
Proceeds from senior notes 4,745
Less capitalised issuance costs (24)
-------
Pro forma adjustment to non-current
portion of borrowings 4,721
Total borrowings 5,240
Weighted average interest rate 0.60%
-------
Pro forma annual interest expense 31
Pro forma annual amortization of
debt issuance costs 3
-------
Pro forma adjustment to finance
costs 34
=======
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Clare Wardle Sarah Willett Shanna Wendt
T +44 20 7355 8406 +44 7970 145 218 T +44 7976 595 168
ABOUT CCEP
Coca-Cola European Partners plc is a leading consumer goods
company in Western Europe, making, selling & distributing an
extensive range of non-alcoholic ready to drink beverages & is
the world's largest Coca-Cola bottler based on revenue. Coca-Cola
European Partners serves a consumer population of over 300 million
across Western Europe, including Andorra, Belgium, continental
France, Germany, Great Britain, Iceland, Luxembourg, Monaco, the
Netherlands, Norway, Portugal, Spain & Sweden. The Company is
listed on Euronext Amsterdam, the New York Stock Exchange, London
Stock Exchange & on the Spanish Stock Exchanges, trading under
the symbol CCEP. For more information about CCEP, please visit
www.cocacolaep.com & follow CCEP on Twitter at @CocaColaEP.
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