Never underestimate the far-reaching power of the stock market, even when it comes to influencing the location of a company’s headquarters.
I didn’t understand why Coca-Cola Enterprises, with all of its operations in Europe after last month’s sale of its North American unit to Coke, is still headquartered in Cobb County’s Wildwood Office Park. I know Cobb’s a nice place, but I don’t think anyone would mistake it for London or Paris.
And that’s the problem, explained CCE chief John Brock. The bottler, which serves seven Western European countries, wanted to maintain its primary listing on the New York Stock Exchange “to keep all the index funds invested” in CCE, Brock said in an interview. If it became a European company, indexes like the S&P 500 would no longer include CCE — and neither would the funds that use such indexes for stock purchases.
So CCE is keeping about 140 employees at its headquarters here, while the remaining 13,000 work overseas. Brock, meanwhile, will be boosting his frequent flier miles. And that’s not all he hopes to boost.
Since Coke and CCE announced the $12 billion deal last February, CCE’s shares have risen about 80 percent for stockholders who were aboard at that time. What’s more, now that the deal is done, CCE has a much lighter balance sheet. Some $8 billion in debt has been transferred to Coke, something CCE investors may continue to benefit from going forward. The market, after all, loves cash and it’s not a big fan of leverage, given the disastrous role it played in the Great Recession.
With a much leaner company — about 57,000 fewer employees and $14 billion less in revenue — Brock is focusing on trying to drive European sales. He’s also scoping out opportunities for acquisitions down the road, particularly in the non-carbonated beverage arena. And he’ll be negotiating with Coke to try to buy its German bottling business. That would add more than $2 billion in annual revenue to CCE’s current $7.4 billion.
“The secret to growing is not doing one thing,” Brock, 62, said. “It’s doing an array of things.”
That’s going to be no problem for Brock. He has plenty on his plate, from absorbing the new markets in Norway and Sweden that CCE acquired in the deal, to adding to its beverage portfolio to capture more market share. The company also will be bolstering its marketing programs to capitalize on Coke’s Olympic sponsorship of the London Games in 2012.
While much of Brock’s time and energy will be spent on the other side of the Atlantic, there’s still one key role he will be undertaking here. Starting Dec. 1, the Georgia Tech chemical engineering grad will become chair of the Metro Atlanta Chamber.
He’ll be dealing with the twin problems of water and transportation. If the tri-state water war is not resolved in 20 months, Brock said, we could lose about 250 million gallons a day from Lake Lanier.
“We really need to develop a contingency plan,” he said.
On the 2012 transportation funding referendum, Brock said the business community already is raising money for its passage. Gridlock, after all, is not the best way to sell Atlanta to prospective businesses.
“From a company and job perspective, it’s absolutely critical to pass this,” he said.
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