Coca-Cola Hellenic to Switch Stock Listing from Athens for London

on Oct 12, 2012

In what will be seen as a further snub to the crisis-stricken Greek economy, Coca-Cola Hellenic Group (ATH:EEEK) announced its plans to switch its main stock listing from Athens to London and moving its headquarters to Switzerland, The Financial Times reported on 11 October 2012. With the bottling plant and operations staying in Greece and the move purely financial the company was at pains to reassure that the move would not cost the Greek economy tax earnings and employment.

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**Main Stock Listing to Move to London**
Greece’s biggest firm by market value and world’s second-largest drinks bottler, Coca-Cola Hellenic (CCH), is moving its main stock listing to the London Stock Exchange (LSE) after credit rating agencies downgraded its on the back of Greece’s sovereign downgrade. The firm, which accounts for а fifth of the Athens stock market and has a capitalisation of about €5.7 billion (£4.6 billion), hopes switching to London will rid it of the “Greek discount”, which has depressed its shares because many international investors are afraid of putting money into the debt-ridden country. The company itself put things diplomatically, mentioning the lack of liquidity that has been apparent on the Greek exchange over the past few years.

Under Greek rules the deal is dependent on 90 per cent acceptance by shareholders. Approval from the various regulators is expected in the next six to eight weeks, at which point investors will be offered the opportunity to switch shares on a one-for-one basis into shares in Coca-Cola HBC AG, a new company to be established in Switzerland to take over the Greek business. If the move is approved, the shares will be listed in London in January 2013. Coca-Cola Hellenic also expects to achieve inclusion in the FTSE 100 around March 2013. The company’s current capitalisation and exchange rates would, in theory, rank it as Britain’s 74th-biggest company, just ahead of British Land (LON:BLND).

CCH’s chief executive Dimitris Lois said listing in London would “give us greater recognition among international investors, will increase the liquidity of our stock and improve our access to the international equity and debt markets.” Backing up his statement was the previous day’s trading data which showed that nearly £3.4 billion was traded on the LSE, compared to around €62 million (£50 million) on the Athens Stock Exchange. The Greek stock market has seen trading volumes fall by around 90 per cent since 2007.

**Changing Crisis-Torn Home for Swiss Stability**
!m[](/uploads/story/569/thumbs/pic1_inline.png)As part of Thursday’s announcement, Coca-Cola Hellenic said it is moving its top management to Zug, Switzerland, a canton with some of the lowest tax rates in Europe. Yet the company will maintain its manufacturing base in Greece.
“The Coca-Cola Hellenic Group’s commitment to Greece will remain unaffected,” stated the company. “There will be no impact on jobs, compensation or benefits for any employees of the Coca-Cola Hellenic Group as a result of the transaction.” CCH’s statement further said that Switzerland was chosen as the location for the new company because of its stable economy and regulatory environment and the ease of doing business there.

**Heavy Blow to the Troubled Greek Economy**
Despite the income loss concerns for Greece, a spokesman for the company said: “The move is very much tax neutral. Each country market has its own operating company which pays corporate tax in that country. Since the operating company in Athens will remain, the group’s overall expected tax rate will remain between 25 per cent and 27 per cent.”
Heavy taxation and uncertain economic prospects have driven some big Greek companies out of the country, depriving the Athens bourse and economy of precious capital. Coca-Cola Hellenic’s move comes a week after one of Greece’s biggest dairy companies, Fage Dairy Industry, said it would move its domicile from Athens to Luxembourg, in part to facilitate access to financing. Fage Dairy had been under review by Standard and Poor’s (S&P) for a possible downgrade. S&P lifted that warning this week, saying the transfer of domicile reduced some of the risks associated with a possible exit of Greece from the Eurozone and would likely ease the company’s access to capital markets. According to some analysts, other large Greek companies are also preparing to follow CCH and Fage Dairy’s footsteps in changing listing and domicile, while maintaining their production facilities in the country.


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