Coca-Cola agrees to buy vitamin water maker Glaceau for $4.1 B

<p>The Coca-Cola Co., which has been looking to expand its water and energy drink portfolio and jump-start sales in its struggling North America unit, said Friday it has agreed to buy Vitaminwater maker Glaceau in a cash deal valued at $4.1 billion.</p><p>The world's largest beverage maker said the agreement to acquire privately held Energy Brands, Inc., known as Glaceau, provides Atlanta-based Coca-Cola with a strong platform to grow its active lifestyle beverages.</p><p>The transaction, Coca-Cola's largest acquisition ever, will be financed with debt, and is expected to add to Coca-Cola's earnings per share starting in 2008, but will slightly dilute earnings per share this year, executives said.</p><p>Coca-Cola's chief financial officer, Gary Fayard, said in a conference call with analysts that the deal for full ownership of Glaceau includes the 30 percent stake of Glaceau held by holdings of India's Tata Group, a conglomerate with interests spanning steel, software services, hotels, chemicals and insurance. The Tata stake will be acquired later than the majority stake, Fayard said.</p><p>Tata paid $677 million for the stake last year based on an enterprise value of $2.2 billion for the entire company, Coca-Cola said.</p><p>Fayard added that the deal could have an impact on the company's share repurchase plan. Coca-Cola had previously said it would buy back $2.5 billion to $3 billion of its own shares this year. Fayard said Thursday the company now expects to repurchase at least $1.75 billion to $2 billion in shares in 2007.</p><p>"Let me be clear, we will operate this business to create value for Coca-Cola shareowners," Coca-Cola Chief Executive Neville Isdell said during the conference call with analysts.</p><p>Fayard said the company expects cost savings from the deal to develop later, and he added that Coca-Cola will invest those savings in further growth of Glaceau's brands.</p><p>Formed in 1996 and based in Whitestone, N.Y., Glaceau is the maker of Vitaminwater, Fruitwater, Smartwater and Vitaminenergy.</p><p>The deal to buy Glaceau, which will operate as a separate business unit within Coca-Cola's North America segment, is expected to close in the summer. It is subject to regulatory review. The boards of both companies have approved the transaction.</p><p>Glaceau is an attractive acquisition for Coca-Cola because of its position in the enhanced water and energy drink categories, which Coca-Cola is betting will make up a large portion of the beverage industry's volume and gross profit growth in North America through 2010.</p><p>Coca-Cola said Glaceau's top three executives _ founder and CEO J. Darius Bikoff, president Mike Repole and Chief Financial Officer Mike Venuti _ intend to lead the business for at least three years, and that other key managers will remain in the business.</p><p>A spokeswoman for Glaceau, Nina Fiddian-Green, declined to discuss her company's corporate structure and financial information, and she referred questions to Coca-Cola. Glaceau does not release annual sales figures.</p><p>Coca-Cola has been trying to improve sales in its key North America unit. The company reported a 14 percent increase in first-quarter profit on a double-digit rise in overall sales, though in North America unit-case volume declined 3 percent in the quarter.</p><p>In announcing the deal to buy Glaceau, Coca-Cola executives repeated their effort to re-ignite growth in North America.</p><p>___</p><p>On the Net:</p><p>HASH(0x2dec768)</p><p>HASH(0x2dee77c)</p>

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