Release Details

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 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 YEAR ENDED 31 DECEMBER 2020

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

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:

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:

UNAUDITED ADJUSTED CCL INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

UNAUDITED ADJUSTED CCL BALANCE SHEET

AS OF 31 DECEMBER 2020

UNAUDITED ADJUSTED CCL BALANCE SHEET

AS OF 31 DECEMBER 2020

(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:

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 €356 million, representing a fair value uplift related to finished goods inventory from their historical costs of €29 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:

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:

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 €1.03 billion (representing a fair value uplift of €94 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 €11 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 €197 million increased by a fair value adjustment of €115 million to €312 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 €1.35 billion, or a net increase of €1.21 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 €96 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 €5.2 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 €500 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.

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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.