No Coke, Just Pepsi

The decision by Coca-Cola to acquire the North American assets of Coca-Cola Enterprises, on the face of it, seems like a real head scratcher.  Aside from the fact that Pepsi has agreed to do something similar, after years of nixing this strategic option, it's a hard one to figure.  Warren Buffet, the Oracle of  Omaha, fresh from publishing his 2009 shareholder letter, seems to be giving a tepid "thumbs not down" approval. 

Since both Coke and Enterprises are NYSE publicly traded companies, it's hard to believe that the assets of Enterprises are not priced at something close to fair market value, so it's unlikely that Coke shareholders would be grabbing a bargain.  In addition, Coke shareholders take on the pension obligations of Enterprises just at the time when most companies are waking up to the potential understatement of their PBO's because of overly optimistic assumptions about returns on pension assets of 9% or so. 

It seems as if Enterprises shareholders get some liquidity benefits from a couple of special dividends, and there might be some value in this event for them.  These will be funded by debt, which then, if I understand, will be assumed by Coke.  Enterprises shareholders will then be left owning 100% of the assets of a new distribution and bottling company whose most significant operations will be concentrated in Germany.  So, their portfolio is now without the largest market, namely the U.S. and more concentrated around Europe.  Does this make sense for them?