UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 2015
COCA-COLA ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-34874 |
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27-2197395 |
(State or other jurisdiction
of incorporation) |
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(Commission
File No.) |
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(IRS Employer
Identification No.) |
2500 Windy Ridge Parkway, Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(678) 260-3000
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01. |
Regulation FD Disclosure. |
On August 6, 2015, Coca-Cola Enterprises, Inc. (the
Company or CCE), The Coca-Cola Company (KO) and Coca Cola Iberian Partners, S.A. (CCIP) hosted a conference call for investors to announce that CCE, CCIP, European
Refreshments, Coca-Cola Gesellschaft mit beschränkter Haftung, Vivaqa Beteiligungs GmbH & Co. KG, Spark Orange Limited, Orange MergeCo, LLC and Orange U.S. HoldCo, LLC have entered into a definitive agreement under which CCE, CCIP and
Coca-Cola Erfrischungsgetränke Aktiengesellschaft, a wholly-owned subsidiary of KO, will combine their respective non-alcoholic, ready-to-drink beverage bottling businesses in western Europe. A copy of the investor presentation is attached as
Exhibit 99.1 to this Form 8K and is incorporated herein by reference into this Item 7.01.
Such information shall not be deemed
filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference
in such filing.
On August 6, 2015, CCE, KO and CCIP issued a joint press release
announcing that they had entered into agreements under which CCE and CCIP and KOs wholly owned German subsidiary, Coca-Cola Erfrischungsgetränke Aktiengesellschaft, will be combined after a series of transactions resulting in CCE, CCIP
and Coca-Cola Erfrischungsgetränke Aktiengesellschaft being wholly owned subsidiaries of the newly formed Spark Orange Limited (to be renamed Coca-Cola European Partners), a private limited company organized under the laws of England and Wales.
A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference into this Item 8.01.
Item 9.01. |
Financial Statements and Exhibits. |
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99.1 |
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Investor presentation, dated August 6, 2015 |
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99.2 |
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Joint press release of the Company, KO and CCIP, dated August 6, 2015 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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COCA-COLA ENTERPRISES, INC. |
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(Registrant) |
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Date: August 6, 2015 |
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By: |
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/s/ Suzanne N. Forlidas |
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Name: |
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Suzanne N. Forlidas |
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Title: |
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Vice President, Secretary and Deputy General
Counsel |
Presenting Coca-Cola European Partners August 6, 2015 Exhibit 99.1 |
2 Included in this presentation are forward-looking management comments and other statements that reflect managements current outlook for future periods. Included in this presentation are forward-looking management comments and other statements that reflect managements current outlook for future periods. As always, these expectations are based on currently available competitive, financial, and economic data along with our current operating plans and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward- looking statements. The forward-looking statements in this presentation should be read in conjunction with the risks and uncertainties discussed in our filings with the Securities and Exchange Commission (SEC), including our most recent Form 10-K and other SEC filings. |
3 COCA-COLA EUROPEAN PARTNERS OVERVIEW COCA-COLA EUROPEAN PARTNERS OVERVIEW COCA-COLA EUROPEAN PARTNERS BACKGROUND COCA-COLA EUROPEAN PARTNERS BACKGROUND TRANSACTION HIGHLIGHTS TRANSACTION HIGHLIGHTS |
4 Combines bottling operations of Coca-Cola Enterprises (CCE), Coca-Cola Iberian Partners (CCIP), and Coca-Cola Erfrischungsgetränke (CCEAG) into a new Western European bottler, Coca-Cola European Partners (CCEP), serving over 300 million consumers across 13 countries Combined company pro forma 2015 expected annual net revenues of $12.6 billion and EBITDA of $2.1 billion (before synergies) CCE shareowners to own 48%, CCIP shareowners to own 34%, and The Coca-Cola Company (TCCC) to own 18% of CCEP on a fully diluted basis CCE shareowners to receive one share of CCEP and a cash payment of $14.50 per share of CCE CCEP will be headquartered and incorporated in the United Kingdom and publicly traded on the Euronext Amsterdam, NYSE, and Madrid Stock Exchange * Owned by controlling shareowner of CCIP, expected to be contributed to CCIP prior to closing
Norway Sweden Netherlands Germany France Great Britain Iceland* Spain Portugal Andorra Luxembourg Monaco Belgium |
5 Enhances alignment of the Coca-Cola system (TCCS) to compete more effectively across Western Europe with world-class production, sales, and
distribution platforms
Strategically optimizes TCCS to drive growth in the Western European
Non-Alcoholic Ready-To-Drink (NARTD) market
Improves service to customers and consumers through a more consistent strategy for product and brand development across Western Europe Increases scale and flexibility with a broader geographic footprint Expected to realize annual run-rate pre-tax savings of approximately $350 to
$375 million within 3 years of closing
Leverages best practices and strong leadership from CCE, CCIP, and CCEAG |
6 CCE shareowners to receive one share of CCEP and a cash payment of $14.50 per share of CCE Participation in long-term upside from ownership in CCEP Expected pre-tax, run-rate savings of approximately $350 to $375 million
within 3 years of closing
Solid earnings growth and robust cash flow generation Continued strong focus on driving shareowner value CEO: John Brock, Chairman and CEO of CCE COO: Damian Gammell, CEO of Anadolu Efes CFO: Nik Jhangiani, CFO of CCE CIO*: Victor Rufart, General Manager of CCIP Substantial Value Creation Proven Management Team * Chief Integration Officer |
7 Committed to investment grade capital structure for long-term sustainability
Transaction financed with ~$3.3 billion funded by the new company using newly issued debt Expected to have 2015 pro forma net debt to EBITDA ratio of ~3.5x; given
anticipated cash flows, expect to de-lever to ~2.5x by year-end
2017
Intends to operate within a 2.5x to 3.0x net debt ratio longer term CCEP to target attractive total return to shareowners Expected dividend payout of 30% to 40% of net income over time Potential for excess cash return to shareowners to resume once appropriate
net leverage reached
Transaction expected to close during Q2 2016 Closing subject to CCE shareowner, regulatory, and other approvals Capital Structure Capital Return Expected Timing |
8 COCA-COLA EUROPEAN PARTNERS OVERVIEW COCA-COLA EUROPEAN PARTNERS BACKGROUND TRANSACTION HIGHLIGHTS |
9 Creates the largest independent Coca-Cola bottler based on net revenues Combines bottling operations of CCE, CCIP, and CCEAG into a new Western European bottler, serving over 300 million consumers across 13 countries Strategically positions CCEP to drive growth in the Western European NARTD market Builds on each bottlers capabilities to create more efficient and effective
operations in their respective markets
Expected to realize annual run-rate pre-tax savings of approximately $350 to $375
million within 3 years of closing |
10 Today New Structure CCIP HoldCo Public 100% 100% 100% 18% 34% 48% + $14.50/share in cash (~$3.3bn) for CCE Shareowners Family shareholders CCE Shareholders Coca-Cola European Partners CCE, CCIP, and CCEAG will merge their operations across Europe under a new UK company, CCEP
CCE shareowners to own 48%, CCIP shareowners to own 34%, and TCCC to own 18% of CCEP on a fully
diluted basis Private Incorporated in Germany Private Incorporated in Spain NYSE: CCE Incorporated in the US Euronext Amsterdam
(ASX) New York Stock Exchange (NYSE) Madrid Stock Exchange Incorporated in the UK |
11 Pro Forma 2014 Net Revenue of $12.4B CCE CCEAG CCIP Norway Sweden Netherlands Germany France Great Britain Iceland Spain Portugal Andorra Luxembourg Monaco Belgium Note: Financials based on exchange rates of 1.12 $/, 1.57 $/£, 0.14 $/NOK and 0.12 $/SEK
Great Britain 20% Germany 19% France 18% BeNeLux 13% Norway 4% Sweden 4% Portugal 1% Iceland <1% Spain 21% |
12 Volume (bn unit cases) 2.5 3.4 1.3 2.0 1.3 0.2 0.6 0.5 1.1 0.3 0.7 $12.4 Source: 2014 company filings, FactSet; numbers are rounded |
Serves 13 countries in Western Europe Consumer population base of over 300 million Over 50 bottling plants and ~27,000 associates Leading position in every country Source: Euromonitor (a) Does not include Luxembourg. Portugal Pop: 11m Soft Drinks: 1.4bn TCCC: 0.1bn Norway Pop: 5m Soft Drinks: 0.7bn TCCC: 0.2bn NARTD Market Position # #1 #1 Iceland Pop: 0.3m Sweden Pop: 10m Soft Drinks: 1.1bn TCCC: 0.3bn Great Britain Pop: 64m Soft Drinks: 8.7bn TCCC: 1.9bn France Pop: 65m Soft Drinks: 12.6bn TCCC: 1.4bn Spain Pop: 47m Soft Drinks: 9.4bn TCCC: 1.8bn #1 Germany Pop: 84m Soft Drinks: 20.0bn TCCC: 2.1bn The Netherlands Pop: 17m Soft Drinks: 2.3bn TCCC: 0.4bn Belgium/Lux. Pop: 12m Soft Drinks: 2.5bn (a) TCCC: 0.6bn #1 #1 #1 #1 #1 #1 #1 13 |
14 Leading Coca-Cola System Bottler Supply Chain Excellence World-Class Sales Team Large Store Expertise Excellence in Industrial Productivity Excellence in TCCC Partnership Model World-Class Segmentation of and Execution in Outlets Customer Engagement & Loyalty Winning Household Penetration Strategy Discounter Expertise |
15 Topline Growth Supply Chain Operating Expenditures Expected annual run-rate pre-tax savings of approximately $350 to $375 million within 3 years of closing Shared vision between TCCC and CCEP to drive growth in Western Europe Become a better commercial partner to pan- European, large, local, and independent customers Scale and speed to win in new categories (e.g., stills) Increase efficiency and effectiveness of manufacturing footprint and warehouse operations Savings opportunities in procurement of direct and indirect categories Opportunity to share core support functions across the new company Reduce management team duplications Adjust required headquarters facilities |
16 Key Pro Forma Metrics 2014 2015E Net Revenue EBITDA (before Synergies) Operating Income (before Synergies) Run-Rate Annual Pre-Tax Savings (a) 2015 Net Debt/EBITDA Effective Tax Rate $12.4bn $1.9bn $1.5bn $12.6bn $2.1bn $1.6bn ~$350 to $375m ~3.5x 26% - 28% Note: Financials based on exchange rates of 1.12 $/, 1.57 $/£, 0.14 $/NOK and 0.12 $/SEK
(a) Implemented within 3 years of closing |
17 John Brock, Chairman and CEO of CCE 9 years of experience in the Coca-Cola System 20+ years management experience with leading European beverage companies
Former CEO of InBev (2003-2005) COO of Cadbury Schweppes (1999-2002) Served as Director of Campbell Soup Company and Interbrew/Inbrew 40+ years experience in beverage and consumer products industries, particularly in Western Europe
Damian Gammell, CEO of Anadolou Efes 24 years experience in the Coca-Cola System with key leadership positions
Former CEO of Coca-Cola Içecek, former CEO of CCEAG, former Commercial Director of Coca-Cola
Amatil, former CEO of Coca-Cola Hellenic Russia
Named a Young Global Leader by the World Economic Forum in 2009 Nik Jhangiani, CFO of CCE 15+ years of experience in the Coca-Cola System and 20+ years as finance executive in global markets Former VP of Finance of CCE, former Group CFO of Bharti Enterprises, former CFO of Coca-Cola
Hellenic Bottling Company (2004-2009)
V íctor Rufart, General Manager of CCIP 25 years of experience in the Coca-Cola System Former General Manager of Cobega Mr. Rufart successfuly led the integration of the 8 Spanish and Portuguese bottlers that formed CCIP
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18 CCEP Board of Directors Key Contract Provisions Sol Daurella, Chairwoman of CCIP, to serve as Chairwoman of CCEP John Brock, CEO of CCE, to serve as director 17-member Board with majority (9) independent non-executive directors (INEDs) 7 INEDs selected by CCE 2 additional INEDs with EU experience 5 directors selected by CCIP, including Chair 2 directors selected by TCCC, and CEO to serve as director The Senior Independent Director to be selected by the Board New 10 + 10 bottling agreement Initial four-year incidence pricing agreement extending economic terms currently in place in each respective territory |
19 File Form F-4 registration statement with the SEC CCE shareowner vote to approve the transaction Customary regulatory reviews Closing expected in the second quarter of 2016 |
20 Strengthens the Coca-Cola System in Western Europe Strong strategic and economic rationale Delivers significant value to shareowners CCEP is an attractive long term total return investment opportunity |
21 COCA-COLA EUROPEAN PARTNERS OVERVIEW COCA-COLA EUROPEAN PARTNERS BACKGROUND TRANSACTION HIGHLIGHTS |
22 Strong track record of focusing on cash flow generation and delivering shareowner value Refreshing 170 million consumers annually with 1.3 billion unit cases manufactured and distributed from 17 production facilities by ~12k employees Diversified geographic footprint covering territories with stable economies, affluent consumers, and growing population Geographic Sales Mix Product Volume Mix* Source: CCE 2014 10-K * CSD = Carbonated Soft Drinks, NCB = Non-Carbonated Soft Drinks CSD 87% NCB 10% Water 3% Great Britain 34% France 30% Belgium 15% The Netherlands 8% Norway 7% Sweden 6% |
23 TCCC creates CCE; NYSE listing CCE Merges with Johnston Bottling Group 1986 1991 1993 1996 1997 1998 1999 2010 Current Netherlands acquisition Northern France & Belgium acquired Great Britain & Canada acquired Luxembourg acquired Southern France acquired North America sold; Norway & Sweden acquired Focus on maximizing FCF and return of cash to shareowners Evolution from a US bottler to a European bottler Creation NA and EU Expansion Transformation 1 2 3 |
24 Exclusive bottler for Coca-Cola in Spain, Portugal, Iceland, and Andorra Refreshing 57 million consumers annually with 0.5 billion unit cases manufactured and distributed from 17 production facilities by ~5k employees Leading player in CSDs in Spain and Portugal and leading player in NCBs in Spain Geographic Sales Mix Product Volume Mix Source: Company internal reports CSD 80% NCB 11% Water 9% Spain 94% Portugal 5% Iceland 1% |
25 Formation of CCIP through the merger of 8 bottlers Feb 2013 Beginning of the integration process Jun 2013 End of the integration process Dec 2014 Ongoing Further margin improvement initiatives ~1950 60+ years of experience of success and value creation in the bottling business for TCCC CCIP was formed through the merger of 8 bottlers successful integration process and further margin improvement initiatives underway |
26 Continuous gain of CSD volume share since 2010 Refreshing 80 million consumers annually with 0.7 billion unit cases manufactured and distributed from 20 production facilities by ~10k employees Highest customer satisfaction score of NARTD manufacturers and top workplace in FMCG industry Product Volume Mix Source: Company internal reports CSD 86% NCB 3% Water 11% |
27 Coca-Cola has transformed its German bottling network from a fragmented
patchwork of individually owned local bottlers to a single bottler for the entire
German market
1946 2007 2008 2009 2010
2014 1974 1998 124 bottlers 1 bottler 116 bottlers 8 bottlers Bottler Integration: Financial, legal & organizational consolidation Restructuring: Production, Distribution and HC Scale / Coke One: Harmonization of processes & systems |
Presenting Coca-Cola European Partners August 6, 2015 |
29 Forward-Looking Statements This communication may contain statements, estimates or projections that constitute forward-looking statements as defined under U.S. federal securities laws. Generally, the words believe, expect, intend, estimate, anticipate, project, plan, seek, may, could, would, should, might, will, forecast, outlook, guidance, possible, potential, predict and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Companys (KO), Coca-Cola Enterprises, Inc.s (CCE) or Spark Orange Limiteds (CCEP) historical experience and their respective present expectations or projections, including expectations or projections with respect to the transaction. These risks include, but are not limited to, obesity concerns; water scarcity and poor quality; evolving consumer
preferences; increased competition
and capabilities in the marketplace; product safety and quality concerns; perceived negative health consequences of certain ingredients, such as non-nutritive sweeteners and biotechnology-derived substances, and of other substances present in their beverage products or packaging materials; increased demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging or developing markets; fluctuations in foreign currency exchange rates; interest rate increases; an inability to maintain good relationships with their partners; a deterioration in their partners financial condition; increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters; increased or new indirect taxes in the United States or in other tax jurisdictions; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients, other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of their respective products; an inability to protect their respective information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic or political conditions in the United States, Europe or elsewhere; litigation or legal proceedings; adverse weather conditions; climate change; damage to their respective brand images and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity or other issues; changes in, or failure to comply with, the laws and regulations applicable to their respective products or business operations; changes in accounting standards; an inability to achieve their respective overall long-term growth objectives; deterioration of global credit market conditions; default by or failure of one or more of their respective counterparty financial institutions; an inability to timely implement their previously announced actions to reinvigorate growth, or to realize the economic benefits they anticipate from these actions; failure to realize a significant portion of the anticipated benefits of their respective strategic relationships, including (without limitation) KOs relationship with Keurig Green Mountain, Inc. and Monster Beverage Corporation; an inability to renew collective bargaining agreements on satisfactory terms, or they or their respective partners experience strikes, work stoppages or labor unrest; future impairment charges; multi-employer plan withdrawal liabilities in the future; an inability to successfully manage the possible negative consequences of their respective productivity initiatives; global or regional catastrophic events; risks and uncertainties relating to the transaction, including the risk that the businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, which could result in additional demands on KOs or CCEPs resources, systems, procedures and controls, disruption of its ongoing business and diversion of managements attention from other business concerns, the possibility that certain assumptions with respect to CCEP or the transaction could prove to be inaccurate, the failure to receive, delays in the receipt of, or unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals and the satisfaction of the closing conditions to the transaction, the potential failure to retain key employees of CCE, Coca-Cola Iberian Partners, S.A.s (CCIP) as a result of the proposed transaction or during integration of the businesses and disruptions resulting from the proposed transaction, making it more difficult to maintain business relationships; and other risks discussed in KOs and CCEs filings with the Securities and Exchange Commission (the SEC), including their respective Annual Reports on Form 10-K for the year ended December 31, 2014, subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which filings are available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. None of KO, CCE, CCIP or CCEP undertakes any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. None of KO, CCE, CCIP or CCEP assumes responsibility for the accuracy and completeness of any forward- looking statements. Any or all of the forward-looking statements contained in this filing and in any other of their respective public statements may prove to be incorrect. |
30 Important Additional Information and Where to Find It This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval.
In connection with the proposed transaction, CCEP will file with the SEC a registration
statement on Form F-4 that will include
a preliminary proxy statement/prospectus regarding the proposed transaction. After the registration statement has been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to CCEs stockholders in
connection with the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE
TRANSACTION FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain a copy of the proxy statement/prospectus (when available) and other related documents filed by KO, CCE or CCEP with the SEC regarding the
proposed transaction as well as other filings containing information, free of charge,
through the website maintained by the SEC at
www.sec.gov, by directing a request to KOs Investor Relations department at (404) 676-2121, or to CCEs Investor Relations department at (678) 260-3110, Attn: Thor Erickson Investor Relations. Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained,
when available, without charge, from KOs website at www.coca-colacompany.com under the heading Investors and CCEs website at www.cokecce.com under the heading Investors. Participants in Solicitation KO, CCE and CCEP and their respective directors, executive officers and certain other members of management and
employees may be deemed to be participants in the solicitation of proxies in favor of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of proxies in favor of the proposed merger will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find information about KOs and CCEs directors and executive officers in their respective definitive proxy statements filed with the SEC on
March 12, 2015, and March 11, 2015, respectively. You can obtain free
copies of these documents from KO and CCE, respectively, using the
contact information above. Information regarding CCEPs directors
and executive officers will be available in the proxy
statement/prospectus when it is filed with the SEC. |
Exhibit 99.2
COCA-COLA ENTERPRISES, COCA-COLA IBERIAN PARTNERS AND COCA-COLA ERFRISCHUNGSGETRÄNKE AG TO FORM
COCA-COLA EUROPEAN PARTNERS
Merger Will Create the Worlds Largest Independent Coca-Cola Bottler Based on Net Revenues
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Combines bottling operations of Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetränke AG into a new Western European bottler, serving over 300 million consumers across 13
countries |
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Combined company pro forma 2015 expected annual net revenues of approximately $12.6 billion and EBITDA of $2.1 billion |
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Enhances the Coca-Cola system to more effectively compete and drive growth across developed European markets with a world-class production, sales and distribution platform |
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Coca-Cola European Partners is expected to realize annual run-rate pre-tax synergies of approximately $350-375 million within three years of closing |
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Coca-Cola Enterprises shareowners to own 48%, Coca-Cola Iberian Partners shareowners to own 34% and The Coca-Cola Company to own 18% of Coca-Cola European Partners shares on a fully diluted basis
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Coca-Cola Enterprises shareowners to receive one share of Coca-Cola European Partners and a one-time cash payment of $14.50 per share |
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Coca-Cola European Partners will be publicly traded on the Euronext Amsterdam, the New York Stock Exchange and the Madrid Stock Exchange |
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Investment community conference call at 8:30 a.m. EDT, 1:30 p.m. BST and 2:30 p.m. CEST |
ATLANTA and MADRID, Aug. 6, 2015 Coca-Cola Enterprises, Inc. (CCE) (NYSE: CCE)
(Euronext Paris: CCE), Coca-Cola Iberian Partners SA (CCIP) and Coca-Cola Erfrischungsgetränke AG (CCEAG), a wholly owned subsidiary of The Coca-Cola Company (NYSE: KO), today announced they have agreed to combine their
businesses into a new company to be called Coca-Cola European Partners Plc., in a transformational transaction that will create the worlds largest independent Coca-Cola bottler based on net revenues. Through a world-class production, sales and
distribution platform for the Coca-Cola system in Western Europe, Coca-Cola European Partners will be positioned to deliver superior execution and customer service, driving long-term value creation for
shareowners.
Strategically Positioned to Capture Growth
With more than 50 bottling plants and approximately 27,000 associates, Coca-Cola European Partners will serve a consumer population of over 300 million in
13 countries across Western Europe, including Andorra, Belgium, France, Germany, Great Britain, Iceland, Luxembourg, Monaco, Norway, Portugal, Spain, Sweden and the Netherlands. The combined company will operate in the four largest markets for
nonalcoholic ready-to-drink beverages in Western Europe Germany, Spain, Great Britain and France.
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Once combined, Coca-Cola European Partners will leverage and build on the best practices from each respective market and bottler to improve
service to customers and consumers through a more consistent strategy for product development and market execution across Western Europe. The increased scale and flexibility of Coca-Cola European Partners broader European geographic footprint
will allow it to compete more effectively across nonalcoholic beverage categories.
Coca-Cola European Partners is expected to generate substantial synergies, including supply chain benefits and operating efficiencies. These synergies are
expected to result in realized annual run-rate pre-tax savings of approximately $350-375 million within three years of closing. The new companys synergies will also position it for increased investment in sales and customer-facing
activities to drive incremental top-line and profit growth over the long term. |
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Coca-Cola European Partners will combine the unique market knowledge of CCE, CCIP and CCEAG, enabling increased
coordination and innovation to better serve customers and consumers at a local level in each market. As a larger and more diverse company, Coca-Cola European Partners will continue to invest, employ, manufacture and distribute locally, maintaining a
strong commitment to the economic and social well-being of each community it serves.
The creation of a larger, unified Coca-Cola bottling partner
in Western Europe represents an important step in our global systems evolution, said Muhtar Kent, Chairman and Chief Executive Officer of The Coca-Cola Company. We continue to adapt our business model to innovate, invest and grow
along with the changing demands of the marketplace. With the strong leadership that will be assembled from across the three organizations, Coca-Cola European Partners will be well-positioned to deliver better and more effective service to customers
throughout Western Europe and drive profitable growth across multiple beverage categories.
Sol Daurella, Executive Chairwoman of Coca-Cola Iberian
Partners, added, In 2013, we combined our family-owned Iberian Coca-Cola bottlers with over 60 years of history to better serve our customers and consumers. Our Iberian shareowners see todays
announcement as an important step to further develop and optimize our offerings in Western Europe. As the single-largest shareowner in this new business we will play a strong strategic role in Coca-Cola European Partners, while continuing to be
close to our country, business, local consumers and customers. Combining our unique expertise in the on-premise channels, targeted marketing experience and operational excellence with the skills of CCE and CCEAG, together we will drive growth in
Western Europe.
The creation of Coca-Cola European Partners will build on each bottlers capabilities to create more efficient
operations in their respective markets across Western Europe, said John Brock, Chairman and Chief Executive Officer of Coca-Cola Enterprises. We look forward to bringing together our world-class supply chain and sales team with the
distinct strengths offered by CCIP and CCEAG to capture additional growth opportunities in each market. This transaction offers clear synergies, along with the scale to better serve the needs of our customers and consumers in Western Europe, to
become an even stronger partner to The Coca-Cola Company and create increased value for CCEs shareowners.
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Management and Governance
Ms. Daurella will become Chairwoman of Coca-Cola European Partners and Mr. Brock will become Chief Executive Officer. Both will be members of the
Board of Directors.
Damian Gammell, currently Beverage Group President and CEO of Anadolu Efes and a previous Chief Executive Officer of CCEAG, will join
CCE as Chief Operating Officer in autumn 2015 and become Chief Operating Officer of Coca-Cola European Partners upon closing. Manik (Nik) Jhangiani, currently the Chief Financial Officer of CCE, will become Coca-Cola European
Partners Chief Financial Officer and Víctor Rufart, currently General Manager of CCIP, will become Chief Integration Officer. Other members of the new executive team will be announced before the closing of the transaction.
Along with Ms. Daurella and Mr. Brock, the initial Board of Directors of Coca-Cola European Partners will consist of 15 additional members, with the
majority of the Board being independent, non-executive directors.
Coca-Cola European Partners will be incorporated in the United Kingdom, one of its
largest markets, with its headquarters in London. The combined company will be publicly traded with listings on the Euronext Amsterdam, the New York Stock Exchange and the Madrid Stock Exchange.
Transaction Structure
At closing, Coca-Cola Iberian
Partners and The Coca-Cola Company will own 34% and 18% of the combined company, respectively, with CCE shareowners owning 48% on a fully diluted basis. CCE shareowners will receive, for each CCE share held, one share of Coca-Cola European Partners
and a one-time cash payment of $14.50 per share. The aggregate one-time cash payment of approximately $3.3 billion will be funded by the new company using newly issued debt.
On a pre-synergy, pro forma basis, for 2015 the combined companys annual net revenues are expected to be approximately $12.6 billion with $2.1 billion
of EBITDA and $1.6 billion of operating income with a volume of 2.5 billion unit cases. Coca-Cola European Partners effective tax rate is expected to be in a range of 26 to 28%.
The combined company is expected to have a 2015 pro forma net debt to EBITDA ratio of approximately 3.5x, and given anticipated cash flows, is expected to
de-lever to approximately 2.5x by year-end 2017. Coca-Cola European Partners is fully committed to an investment-grade rating and intends to operate within a 2.5x-3.0x net debt to EBITDA ratio longer term. It intends to distribute dividends per
share in the range of approximately 30 to 40% of net income over time, to be determined by its Board of Directors.
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The Coca-Cola Company expects to account for its stake under the equity method of accounting and expects the
merger to be slightly accretive to 2016 comparable EPS.
In support of this growth plan, The Coca-Cola Company and Coca-Cola European Partners will enter
into a new 10-year bottling agreement with an option to renew for an additional 10-year period. There will be an initial four-year incidence pricing agreement, extending economic terms currently in place in each respective territory.
Approvals
The Boards of Directors of Coca-Cola
Enterprises, Coca-Cola Iberian Partners and The Coca-Cola Company have approved the transaction. The proposed merger is subject to approval by CCEs shareowners, receipt of regulatory clearances and other customary conditions. The merger is
expected to close in the second quarter of 2016.
Advisers
Deutsche Bank acted as exclusive financial adviser to The Coca-Cola Company. Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel to The
Coca-Cola Company, and Skadden, Arps, Slate, Meagher & Flom LLP acted as tax counsel to The Coca-Cola Company.
Lazard acted as lead financial
adviser to CCE and Cahill Gordon & Reindel LLP and Slaughter and May served as legal counsel to the company. Credit Suisse acted as financial adviser to the Franchise Relationship Committee (FRC) of the Board of Directors of CCE; Clay Long
Esq. and Baker Hostetler LLP served as legal counsel to the FRC.
Rothschild acted as exclusive financial adviser to Coca-Cola Iberian Partners.
Allen & Overy LLP and Uria Menendez served as legal counsel to Coca-Cola Iberian Partners.
Investor Conference Call Details
All three parties will host a conference call with investors to discuss the announcement at 8:30 a.m. EDT, 1:30 p.m. BST and 2:30 p.m. CEST. We invite
investors to listen to the live audiocast of the conference call at either www.thecoca-colacompany.com or http://www.cokecce.com in the Investors section. Further, a supplemental presentation providing additional details
pertaining to the transaction and addressing financial modeling related questions is posted in the Investors section of CCEs website.
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Contacts |
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Media |
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Investors and Analysts |
The Coca-Cola Company |
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The Coca-Cola Company |
Kent Landers |
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Tim Leveridge |
T +01.404.676.2683 |
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T +01.404.676.7563 |
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Coca-Cola Enterprises, Inc. |
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Coca-Cola Enterprises, Inc. |
Fred Roselli |
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Thor Erickson |
T +01.678.260.3421 |
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T +01.678.260.3110 |
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Coca-Cola Iberian Partners |
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Coca-Cola Iberian Partners |
Fernando Amenedo / Rosa Yagüe |
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Albert Perez |
T +34.915765250 |
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T +34.915765250 |
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Coca-Cola Erfrischungsgetränke AG |
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Patrick Kammerer |
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T +49.30.22606.9800 |
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About Coca-Cola Enterprises
Coca-Cola Enterprises, Inc. is the leading Western European marketer, producer, and distributor of nonalcoholic ready-to-drink beverages and one of the
worlds largest independent Coca-Cola bottlers. CCE is the sole licensed bottler for products of The Coca-Cola Company in Belgium, continental France, Great Britain, Luxembourg, Monaco, the Netherlands, Norway, and Sweden. CCE operates with a
local focus and has 17 manufacturing sites across Europe, where the company manufactures nearly 90 percent of its products in the markets in which they are consumed. Sustainability is core to CCEs business, and the company has been recognized
by leading organizations in North America and Europe for its progress in water use reduction, carbon footprint reduction, and recycling initiatives. For more information about CCE, please visit www.cokecce.com and follow the company on
Twitter at @cokecce.
About Coca-Cola Iberian Partners
Coca-Cola Iberian Partners is the bottling partner of The Coca-Cola Company for Spain, Portugal and Andorra. Coca-Cola Iberian Partners is responsible for
meeting the demand for The Coca-Cola Companys products at every stage: manufacturing, packaging, distribution and management of the different client channels. Coca-Cola Iberian Partners, with a staff of 4,380 employees, distributes products to
Spain, Portugal and Andorra, serves 396,000 clients and reaches more than 55 million consumers. Coca-Cola Iberian Partners markets 17 different brands with 81 products. It has eight soft drink manufacturers, one of concentrated juice and six
natural mineral water springs in operation. For further information please visit: www.cocacolaiberianpartners.com.
About Coca-Cola
Erfrischungsgetränke AG
Coca-Cola Erfrischungsgetränke AG (CCEAG) is the largest German beverage company with a sales volume of 3.8 billion
liters (2014). As a franchisee of The Coca-Cola Company (Atlanta), CCEAG is in charge of bottling as well as sales and distribution of Coca-Cola branded products in Germany. CCEAG serves around 400,000 trade and horeca customers and employs around
9,500 people. The beverages are bottled at more than 20 production plants.
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About The Coca-Cola Company
The Coca-Cola Company (NYSE: KO) is the worlds largest beverage company, refreshing consumers with more than 500 sparkling and still brands. Led by
Coca-Cola, one of the worlds most valuable and recognizable brands, our Companys portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del
Valle. Globally, we are the No. 1 provider of sparkling beverages, ready-to-drink coffees, and juices and juice drinks. Through the worlds largest beverage distribution system, consumers in more than 200 countries enjoy our beverages at a
rate of 1.9 billion servings a day. With an enduring commitment to building sustainable communities, our Company is focused on initiatives that reduce our environmental footprint, support active, healthy living, create a safe, inclusive work
environment for our associates, and enhance the economic development of the communities where we operate. Together with our bottling partners, we rank among the worlds top 10 private employers with more than 700,000 system associates. For more
information, visit Coca-Cola Journey at www.coca-colacompany.com, follow us on Twitter at twitter.com/CocaColaCo, visit our blog, Coca-Cola Unbottled, at www.coca-colablog.com or find us on LinkedIn at
www.linkedin.com/company/the-coca-cola-company.
Forward-Looking Statements
This communication may contain statements, estimates or projections that constitute forward-looking statements as defined under U.S. federal
securities laws. Generally, the words believe, expect, intend, estimate, anticipate, project, plan, seek, may, could,
would, should, might, will, forecast, outlook, guidance, possible, potential, predict and similar expressions identify
forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from The Coca-Cola Companys
(KO), Coca-Cola Enterprises, Inc.s (CCE) or Spark Orange Limiteds (CCEP) historical experience and their respective present expectations or projections, including expectations or
projections with respect to the transaction. These risks include, but are not limited to, obesity concerns; water scarcity and poor quality; evolving consumer preferences; increased competition and capabilities in the marketplace; product safety and
quality concerns; perceived negative health consequences of certain ingredients, such as non-nutritive sweeteners and biotechnology-derived substances, and of other substances present in their beverage products or packaging materials; increased
demand for food products and decreased agricultural productivity; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand operations in emerging or developing markets; fluctuations in foreign
currency exchange rates; interest rate increases; an inability to maintain good relationships with their partners; a deterioration in their partners financial condition; increases in income tax rates, changes in income tax laws or unfavorable
resolution of tax matters; increased or new indirect taxes in the United States or in other tax jurisdictions; increased cost, disruption of supply or shortage of energy or fuels; increased cost, disruption of supply or shortage of ingredients,
other raw materials or packaging materials; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the availability of their respective products; an
inability to protect their respective information systems against service interruption, misappropriation of data or breaches of security; unfavorable general economic or political conditions in the United States, Europe or elsewhere; litigation or
legal proceedings; adverse weather conditions; climate change; damage to their respective brand images and corporate reputation from negative publicity, even if unwarranted, related to product safety or quality, human and workplace rights, obesity
or other issues; changes in, or failure to comply with, the laws and regulations applicable to their respective products or business operations; changes in accounting standards; an inability to achieve their respective overall long-term growth
7
objectives; deterioration of global credit market conditions; default by or failure of one or more of their respective counterparty financial institutions; an inability to timely implement their
previously announced actions to reinvigorate growth, or to realize the economic benefits they anticipate from these actions; failure to realize a significant portion of the anticipated benefits of their respective strategic relationships, including
(without limitation) KOs relationship with Keurig Green Mountain, Inc. and Monster Beverage Corporation; an inability to renew collective bargaining agreements on satisfactory terms, or they or their respective partners experience strikes,
work stoppages or labor unrest; future impairment charges; multi-employer plan withdrawal liabilities in the future; an inability to successfully manage the possible negative consequences of their respective productivity initiatives; global or
regional catastrophic events; risks and uncertainties relating to the transaction, including the risk that the businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, which
could result in additional demands on KOs or CCEPs resources, systems, procedures and controls, disruption of its ongoing business and diversion of managements attention from other business concerns, the possibility that certain
assumptions with respect to CCEP or the transaction could prove to be inaccurate, the failure to receive, delays in the receipt of, or unacceptable or burdensome conditions imposed in connection with, all required regulatory approvals and the
satisfaction of the closing conditions to the transaction, the potential failure to retain key employees of CCE, Coca-Cola Iberian Partners, S.A.s (CCIP) as a result of the proposed transaction or during integration of the
businesses and disruptions resulting from the proposed transaction, making it more difficult to maintain business relationships; and other risks discussed in KOs and CCEs filings with the Securities and Exchange Commission (the
SEC), including their respective Annual Reports on Form 10-K for the year ended December 31, 2014, subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which filings are available from the SEC.
You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. None of KO, CCE, CCIP or CCEP undertakes any obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise. None of KO, CCE, CCIP or CCEP assumes responsibility for the accuracy and completeness of any forward-looking statements. Any or all of the forward-looking statements contained in this filing
and in any other of their respective public statements may prove to be incorrect.
Important Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or
approval.
In connection with the proposed transaction, CCEP will file with the SEC a registration statement on Form F-4 that will include a
preliminary proxy statement/prospectus regarding the proposed transaction. After the registration statement has been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to CCEs stockholders in connection with
the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain a copy of the proxy statement/prospectus (when available) and other related documents filed by KO, CCE or CCEP with the SEC regarding the proposed transaction as well as
other filings containing information, free of charge, through the website maintained by the SEC at www.sec.gov, by directing a request to KOs Investor Relations department at (404) 676-2121, or to CCEs Investor Relations department
at (678) 260-3110, Attn: Thor Erickson Investor Relations. Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, when
available, without charge, from KOs website at www.coca-colacompany.com under the heading Investors and CCEs website at www.cokecce.com under the heading Investors.
8
Participants in Solicitation
KO, CCE and CCEP and their respective directors, executive officers and certain other members of management and employees may be deemed to be participants
in the solicitation of proxies in favor of the proposed merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of proxies in favor of the proposed merger will be set forth in the
proxy statement/prospectus when it is filed with the SEC. You can find information about KOs and CCEs directors and executive officers in their respective definitive proxy statements filed with the SEC on March 12, 2015, and
March 11, 2015, respectively. You can obtain free copies of these documents from KO and CCE, respectively, using the contact information above. Information regarding CCEPs directors and executive officers will be available in the proxy
statement/prospectus when it is filed with the SEC.
No Profit Forecast
No statement in this announcement is intended to constitute a profit forecast for any period, nor should any statements be interpreted to mean that
revenues, EBITDA, earnings per share or any other metric will necessarily be greater or less than those for the relevant preceding financial periods for CCE, CCIP, Coca-Cola Erfrischungsgetränke AG (CCEAG) or CCEP, as
appropriate. No statement in this announcement constitutes an asset valuation.
Subject to its legal and regulatory obligations, neither CCEP, nor
any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the statements contained in this document to reflect any change in expectations with regard thereto or any change in events,
conditions or circumstances on which any statement is based. In no circumstances shall the provision of this document imply that no negative change may occur in the business of CCE, CCIP, CCEAG or CCEP, as appropriate, after the date of provision of
this document, or any date of amendment and/or addition thereto.
This document is not a prospectus for the purposes of the Prospectus Directive. A
prospectus prepared pursuant to the Prospectus Directive is intended to be published, which, when published, will be available from CCEP at its registered office. Investors should not subscribe for any securities referred to in this document except
on the basis of information contained in the prospectus. The expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in any relevant Member State) and
includes any relevant implementing measure in the relevant Member State. Any offer of securities to the public that may be deemed to be made pursuant to this communication in any EEA Member State that has implemented the Prospectus Directive is
addressed solely to qualified investors (within the meaning of the Prospectus Directive) in that Member State.
NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
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