Tokyo, February 22, 2006 -- Kinki Coca-Cola Bottling Company, Limited (Kinki CCBC) and Coca-Cola West Japan Company, Limited (CCWJ) today co-announced that the board of directors of each company today decided to establish a joint holding company “Coca-Cola West Holdings Company, Limited (CCWHD)” and merge the management of both companies, with July 1, 2006 as a target date, through demerger and share exchange.
1. Background
In light of the drastic changes that have occurred in the soft drink market environment in recent years, including the diversification of consumer needs, change of distribution channels, and intensified sales competition, Kinki CCBC and CCWJ have each built firm positions as leading companies in their respective business territories.
In order to fully utilize the strengths of both companies and establish their competitive superiority toward leading the way in Japan’s Coca-Cola business and continuing to achieve sustainable growth, the two companies reached a basic agreement and entered into a business alliance on December 21, 2005. Subsequently, the two companies reviewed the business comprehensively primarily focusing on the four projects to strengthen customer services, reinforce their supply chain systems, expand their operational systems, and raise consumer satisfaction levels.
As a result of deliberating the details of the projects, both companies agreed that the best approach would be to build a strong business foundation in an integrated manner, and decided at this time to establish a joint holding company and implement keiei tougou (merger/integration).
2. Objectives
The keiei tougou has four main objectives.
The first objective is to maximize its corporate value. While aiming to increase sales and market share in Japan’s large soft drink market, comprising about one-third of the country’s total population, greater efficiency will be pursued in the system for operating the organization and in administrative processes. Through this, CCWHD will realize sustainable profit growth.
The second objective is to demonstrate leadership toward the transformation of the Coca-Cola system’s business in Japan. Through an even stronger partnership with Coca-Cola (Japan) Company, Limited (CCJC) and other bottlers, CCWHD will work to promote more strongly the growth strategies and structural reforms being implemented by the Coca-Cola system as a whole. Collaborations will also be initiated with companies such as Coca-Cola National Beverages which manages a national integrated supply chain, in an effort to construct an optimal system-wide business structure.
The third objective is to reinforce the business foundation. CCWHD will further expand the business foundations that both Kinki CCBC and CCWJ have such as strong financial base, diversified personnel/organization, and superior sales network. It will maximize the integration synergy through the sharing of their accumulated business know-how and the best practices as common assets.
The fourth objective is to strengthen sales capabilities. Efforts will be made to create value for customers and to raise customer satisfaction to a higher level, particularly through strengthened customer services and an expanded and improved network of vending machines. The aim is to improve the organization’s capabilities as a sales and marketing company, and increase share in western Japan, centering around the Kinki area which is the second largest soft drink market in Japan.
3. Corporate Vision
CCWHD will assume the important role of taking the lead in transforming the Coca-Cola system as a strategic partner of CCJC. Specific areas in which CCWHD will collaborate with CCJC will be wide ranging, including establishment of an integrated process from the strategy planning to sales execution in the market, cooperation in new products development and test marketing, pilot execution of various sales and marketing initiatives, building the foundation for an IT infrastructure, promoting personnel exchanges, and activities related to corporate branding.
CCWHD will build a corporation well trusted by the company’s important stakeholders such as consumers, customers, and shareholders. The strong ties that Kinki CCBC and CCWJ built over the years in the local communities will remain unchanged and will be continued by CCWHD. Moreover, it will act as a good corporate citizen with close ties to the local communities, and contribute to the realization of a prosperous society.
CCWHD will realize a lively workplace where all of the employees will be able to achieve their dreams and find fulfillment in their work. By providing employees with dreams, aspirations, and capabilities with the opportunity to challenge at a more dynamic environment, CCWHD will build a corporation where competent employees can succeed in leading the transformation of the Coca-Cola system.