Arca Continental is continuing to work toward a definitive agreement with The Coca-Cola Company for bottling territory in a large portion of the Southwest United States, including Texas and parts of Oklahoma, New Mexico and Arkansas.
Previously, The Coca-Cola Company announced a letter of intent with Arca Continental, along with Coca-Cola Bottling Company UNITED, to create a joint venture involving these territories. Currently, the area is operated by the Coca-Cola Refreshments unit of The Coca-Cola Company.
During due diligence and transition planning, the companies concluded that it is in the best interests of all parties involved for Arca Continental to focus on the Southwest transition, while UNITED will turn its full attention and resources to its previously announced Atlanta market transition. Consequently, Birmingham, Ala.-based UNITED will no longer participate in the Southwest joint venture.
Arca Continental, a Monterrey, Mexico-based company that bottles Coca-Cola products in areas throughout Latin America, will continue to work with The Coca-Cola Company toward reaching a definitive agreement. Arca and UNITED also look forward to sharing best practices, given that their expected future territories will border each other.
The Coca-Cola Company expects to complete its North American refranchising plan by the end of 2017. The Company’s North American business is healthy and growing, which has prompted strong interest in refranchising. A number of partners, including UNITED, are expanding their existing territories. Others, like Arca Continental, are negotiating to join the North American bottling system for the first time.
The Coca-Cola Company has reached definitive agreements or signed letters of intent to refranchise territories that account for approximately 65% of total U.S. bottler-delivered distribution volume, which equates to 71% of total Coca-Cola Refreshments volume.
J. Alexander “Sandy” Douglas Jr., president, Coca-Cola North America: “The Coca-Cola Company has worked closely with Arca Continental and UNITED in concluding that UNITED’s participation in a joint venture is not in the best interests of all the parties involved. One of the purposes of the letter of intent stage is to allow for due diligence and a deep examination of potential transactions, transitions and operating models. UNITED continues to be a valued partner and is on track to grow significantly through other refranchising agreements with The Coca-Cola Company. We are also very pleased that we continue to work with Arca Continental toward a definitive agreement for their expansion into the United States. Both partners will play a valuable role in leading our U.S. system in the future.”
Claude Nielsen, chairman, Coca-Cola Bottling Company UNITED: “In May, our system announced a proposed joint venture with Arca Continental involving Coca-Cola franchise operations in much of the Southwest. During our due diligence, we concluded that it is in the best interests of our company to discontinue joint venture discussions, which will permit us to continue work on flawless transitions of previously announced acquisitions, most notably the Atlanta market unit. We believe Arca Continental, an exceptional and very capable company, is well positioned to very effectively operate the Southwest territories. We already have a very robust collaboration with Arca and fully expect to continue our work together as they become our neighbors in the U.S. market. We will continue to work with our valued partners at The Coca-Cola Company and in the Coca-Cola system to add new territory to our fast-growing company. We are very optimistic about the future of the Coca-Cola business in the United States, and we’re excited about opportunities to expand our role in the system.”
Francisco Garza Egloff, Chief Executive Officer, Arca Continental: “As we announced in May, we remain fully committed to work with The Coca-Cola Company towards reaching a definitive agreement to enter the U.S. market by the middle of next year. We are certain that, together with the great team of CCR, we’ll have the capabilities to better serve the highly attractive markets in the Southwest territories, starting day one by deploying the best practices of both our companies. We would like to recognize UNITED’s outstanding professionalism, values and spirit of collaboration, not only during this due diligence, but throughout all the years that we have had the fortune to work together with the highest commitment to create value in the Coca-Cola System. We are certain that both of us will continue to work together as neighbors to strengthen even more the leadership of our brands and customers’ satisfaction in the Coca-Cola North America System.”