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CNBC TRANSCRIPT: CNBC'S "SQUAWK BOX" SITS DOWN WITH COCA-COLA CEO MUHTAR KENT AND COCA-COLA ENTERPRISES CEO JOHN BROCK TODAY

WHEN: TODAY, THURSDAY, FEBRUARY 25TH AT 9:45AM ET

WHERE: CNBC'S"SQUAWK BOX"

Following is the unofficial transcript of a CNBC interview with Coca-Cola CEO Muhtar Kent and Coca-Cola Enterprises CEO John Brock today, 9:45 AM ET on CNBC's "Squawk Box."

All references must be sourced to CNBC.

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BECKY QUICK: JOINING US RIGHT NOW EXCLUSIVELY TO TALK ABOUT THIS DEAL IS COCA-COLA CEO MUHTAR KENT AND CEO OF COCA-COLA ENTERPRISES JOHN BROCK. THANK YOU FOR JOINING US THIS MORNING. WE APPRECIATE IT.

MUHTAR KENT: THANK YOU.

JOHN BROCK: THANK YOU.

QUICK: MUHTAR, MAYBE YOU COULD TELL US ABOUT WHY THIS DEAL MAKES SENSE NOW, BECAUSE THIS IS A BIG REVERSAL OF COKE'S STRATEGY OVER THE DECADES. IN FACT ITS VERY DIFFERENT FROM WHAT YOU WERE EVEN TELLING THE STREET MONTHS AGO.WHY DOES THIS DEAL MAKE SENSE NOW?

KENT: IT MAKES SENSE BECAUSE IT TOTALLY IN LINE WITH OUR 2020 VISION THAT WE HAVE ANNOUNCED TO THE MARKETS LAST YEAR. AND WE ARE HERE TOGETHER WITH OUR -- WITH THE CEO OF COCA-COLA ENTERPRISES, ANNOUNCING DECISIVE ACTION TO STRENGTHEN STRATEGICALLY OUR PARTNERSHIP. THAT'S WHY THIS MAKES SO MUCH SENSE. THIS DEAL WILL ALLOW US TO CAPTURE LONG-TERM EFFICIENCIES IN THE CRITICAL NORTH AMERICAN MARKET. IT WILL ALLOW THE COCA-COLA COMPANY TO CONVERT ITS PASSIVE CAPITAL INTO ACTIVE CAPITAL. ALLOW THE PACE OF INNOVATION TO INCREASE THE SPEED OF INNOVATION TO INCREASE. IT WILL GIVE US THE BEST FOOTPRINT OF PRODUCTION, DISTRIBUTION AND SALES OF THE MOST PREFERRED BEVERAGE BRANDS IN THE LARGEST PROFIT POOL IN THE WORLD OF BEVERAGE, NONALCOHOLIC BEVERAGES. LAST BUT NOT LEAST, STRENGTHEN STRATEGICALLY OUR EUROPEAN FOOTPRINT, ANOTHER CRITICAL MARKET FOR COCA-COLA IN EUROPE. IT IS NOT A REVERSAL AT ALL. IT IS ACTUALLY FULLY IN LINE. WHAT WE HAVE SAID ALL ALONG IS THAT CCE CONTINUES TO BE A VERY TRUSTED, IMPORTANT KEY PARTNER FOR US IN ONE OF THE MOST KEY MARKETS, WHICH IS EUROPE. THAT'S WHY THIS MAKES SO MUCH SENSE FOR US.

QUICK: MR. KENT, I'VE BEEN TRYING TO FIGURE IT OUT THIS MORNING. I WILL ADMIT BEING A LITTLE CONFUSED BY SOME OF THE DETAILS, BUT THIS MADE SENSE AS A STRATEGY TO HAVE THE BOTTLERS OPERATING SEPARATELY IN NORTH AMERICA BACK IN THE MID-1980s BECAUSE, I GUESS, CONSUMERS' TASTES WERE A LITTLE DIFFERENT AT THAT POINT AND BECAUSE YOU HAD A GLOBAL EXPANSION GOING ON? AM I RIGHT TO ASSUME THAT?

KENT: NO, THE FRANCHISE STRUCTURE NEEDS TO ALWAYS EVOLVE BECAUSE CONSUMERS EVOLVE, CUSTOMERS EVOLVE. THAT'S WHAT'S HAPPENED IN THE UNITED STATES. OUR STRUCTURE HAS NOT -- HAS ESSENTIALLY NOT CHANGED SINCE 1986. CONSUMERS HAVE CHANGED. CUSTOMERS HAVE CHANGED. WE REALLY HAVE TO, THEREFORE, EVOLVE OUR FRANCHISE STRUCTURE. THAT'S WHAT THIS DEAL IS ABOUT. EVOLVING OUR FRANCHISE STRUCTURE TO BETTER SERVE OUR CONSUMERS, BETTER SERVE OUR CUSTOMERS, AND THAT'S WHY THIS DEAL RIGHT NOW MAKES SO MUCH SENSE. IT WILL ADD VALUE, TREMENDOUS VALUE, TO ALL OUR STAKEHOLDERS, ALL OUR SHAREHOLDERS. AS I SAID, IT WILL ALLOW US TO REAP THOSE LONG-TERM EFFICIENCIES, SYNERGIES, SO THAT WE CAN HAVE MORE FUEL FOR OUR BRANDS.

QUICK: MR. BROCK, YOUR SHARES -- GO AHEAD. I'M SORRY, MR. KENT.

KENT: AND THERE IS ABSOLUTELY AN IMPORTANT PLACE, A CRITICAL PLACE FOR US TO ADVANCE OUR FRANCHISE PARTNERSHIPS AROUND THE WORLD. EVEN WITH THIS DEAL, WHERE WE ARE TAKING OVER THE NORTH AMERICAN ASSETS OF OUR LARGEST BOTTLER, COCA-COLA ENTERPRISES, TOTALLY GLOBALLY, 72% OF OUR TOTAL GLOBAL VOLUME WILL STILL BE IN THE HANDS OF OUR FRANCHISE PARTNERS ACROSS THE WORLD. AND THAT IS A CRITICAL, CRITICAL ELEMENT AND WE ARE TOTALLY ALIGNED HERE SITTING WITH CCE IN HOW WE ADVANCE OUR STRATEGIC PARTNERSHIP DECISIVELY.

QUICK: MR. BROCK YOUR SHARES ARE GOING TO BE SHARPLY HIGHER THIS MORNING, IN FACT IT LOOKS LIKE THEY WILL OPEN HIGHER BY ABOUT $5.50. THAT'S A MASSIVE MOVE. WHERE DO YOU SEE THE FUTURE OF CCE AT THIS POINT? HOW DO YOU OPERATE IN CONJUNCTION WITH COCA-COLA AND WHAT DOES THIS MEAN ON YOUR GLOBAL OPERATIONS?

BROCK: LET ME REITERATE WHAT MUHTAR JUST SAID. WE'RE DOING THIS TRANSACTION IN A VERY FAVORABLE LIGHT WITH EACH OTHER, DEALING FROM A POSITION OF STRENGTH. WE HAD THE BEST YEAR IN OUR COMPANY'S HISTORY. LAST YEAR OUR TEAM HAS DONE A GREAT JOB AND OUR RELATIONSHIP I THINK IS PROBABLY WITH THE COCA-COLA COMPANY THE STRONGEST IT'S BEEN IN OUR HISTORY. THE TRANSACTION MAKES GOOD SENSE TOTALLY IN TERMS OF GETTING THE NORTH AMERICAN BUSINESS WHERE IT NEEDS TO BE AS MUHTAR HAS ALREADY EXPLAINED. WE THINK THAT MAKES SENSE, AND FRANKLY IT ALLOWS US TO TAKE OUR VERY STRONG EUROPEAN BUSINESS WHERE WE HAVE LEADING MARKET SHARES, OUTSTANDING BRANDS THAT ARE GROWING, LOWER PER CAPITA CONSUMPTION THERE THAN IN NORTH AMERICA SO THE OPPORTUNITY FOR GROWTH IS HUGE AND THAT WE'VE STRUCTURED THIS TRANSACTION IN SUCH A WAY THAT THE CAPITAL STRUCTURE OF OUR NEW CCE IN EUROPE IS GOING TO BE VERY SOLID, VERY SOUND. WE'RE GOING TO BE GIVING A $10 PER SHARE CASH DISTRIBUTION TO ALL SHARE OWNERS AS PART OF THE TRANSACTION AND THEN THEY'LL OWN A SHARE IN -- ONE SHARE PER SHARE IN NEW CCE. WE THINK THE GROWTH PROFILE, THE GROWTH POSSIBILITIES FOR OUR NEW, EXPANDED EUROPE, CCE, ARE TRULY OUTSTANDING.

JAMES PAULSEN: THIS IS JIM PAULSEN, I WAS JUST CURIOUS TO EITHER ONE OF YOU. WHAT SPECIFICALLY MADE THIS COME ABOUT NOW? LIKE IN THE LAST THREE TO SIX MONTHS? IS IT THE CHANGE IN RELATIVE VALUES BETWEEN YOUR COMPANIES? IS IT THE CHANGE IN CASH FLOW THAT HAS CREATED BECAUSE OF THE RECESSION? IS IT THE RECOVERY? I UNDERSTAND THE BENEFITS FROM IT BUT WHAT IS IT THAT BROUGHT ABOUT THE DEAL NOW?

KENT: WE'VE BEEN IN DISCUSSIONS FOR A LONG TIME OVER THE -- LONGER THAN A YEAR ABOUT HOW TO STRATEGICALLY TRANSFORM THE BUSINESS IN NORTH AMERICA AND HOW TO STRATEGICALLY STRENGTHEN THE BUSINESS -- OUR BUSINESS IN WESTERN EUROPE. THE COCA-COLA COMPANY HAS TREMENDOUS GROWTH POTENTIAL IN ALL THE EMERGING MARKETS AS YOU SEE FROM ALL OUR NUMBERS EVERY QUARTER. WHAT THIS PLAY DOES IS IT TAKES TWO OF THE LARGEST PROFIT POOLS, NORTH AMERICA AND NONALCOHOLIC BEVERAGES AND WESTERN EUROPE AND CREATES FOR THE COCA-COLA SYSTEM AND COCA-COLA COMPANY A WONDERFUL FUSION OF THE HIGH GROWTH OF EMERGING MARKETS AND ALSO THE SYNERGY PLAY AND PROFIT PLAY FROM BOTH NORTH AMERICA AS WELL AS WESTERN EUROPE AND THEREFORE THE TIME HAS COME TO REALIZE THOSE VALUES.

JOE KERNEN: MR. KENT, IS IT A FAIR STATEMENT TO SAY THE GROWTH POSSIBILITIES FOR THE OLD COKE, THERE ACTUALLY IS AN OLD COKE, BUT FOR THE SODA, THE GROWTH OPPORTUNITIES ARE STILL THERE IN EUROPE, MAYBE NOT DOMESTICALLY. THEREFORE, YOU KEEP THE MODEL, THE BOTTLING MODEL THAT WORKED THERE BUT IN THIS COUNTRY YOU NEED NIMBLE -- YOU NEED TO BE MORE NIMBLE WITH THE SMALLER NICHE PRODUCTS AND THEREFORE THE BOTTLING MODEL DOESN'T WORK AS WELL IN THIS COUNTRY ANYMORE. IS THAT A WAY TO LOOK AT THIS?

KENT: NO. OUR BUSINESS IN NORTH AMERICA WAS IN ANY CASE STRUCTURED VERY DIFFERENTLY THAN THE WAY OUR BUSINESS IS STRUCTURED INTERNATIONALLY. WE WERE -- WE HAD A TOTALLY EXCLUSIVE COCA-COLA COMPANY OPERATED FOUNTAIN BUSINESS IN THE UNITED STATES. WE HAVE A JUICE BUSINESS THAT IS OPERATED BY THE COCA-COLA COMPANY. WE HAVE FILLING OPERATIONS, FACTORIES THAT FILL STILL BEVERAGES OPERATED BY THE COCA-COLA COMPANY. IN INTERNATIONAL MARKETS ALL THOSE ARE OPERATED BY OUR BOTTLING SYSTEM AND THEREFORE WHAT WE'RE DOING IS TAKING THE OPERATIONS OF CCE AND WE WILL FUSE THOSE WITH OUR OPERATIONS, REALIZE THE SYNERGIES, ENSURE WE'RE BEST IN CLASS AND PRODUCTION AND SERVICE TO OUR CUSTOMERS AND THAT'S WHY THIS TRANSACTION IS ABSOLUTELY TIMELY AND IT WILL ALLOW US TO CONTINUE TO GROW, I MAY ADD, IN THE UNITED STATES AS WELL AS STRENGTHEN AND CONTINUE TO GROW IN WESTERN EUROPE, WHICH ARE TWO CRITICAL MARKETS. THAT'S WHY THIS IS SO IMPORTANT.

QUICK: BUT YOU DID MENTION THAT --

BROCK: LET ME JUST ADD ONE POINT. WE HAVE DEMONSTRATED THAT IN DEVELOPED MARKETS OUR CARBONATED SOFT DRINK, SPARKLING BUSINESS, CAN GROW. RED, BLACK, AND SILVER COCA-COLA STRATEGY IN EUROPE IS WORKING BEAUTIFULLY. IF YOU LOOK AT THE PAST TWO YEARS BRAND COCA-COLA, TRADEMARK COCA-COLA IS GROWING. THAT SAME PROFILE CAN HAPPEN IN THE UNITED STATES AND I THINK, AGAIN, YOU'LL SEE THAT CHANGING AS WE GO FORWARD.

QUICK: MR. KENT, YOU DID MENTION EARLIER THE CHANGING TASTES OF AMERICAN CONSUMERS. CAN YOU KIND OF LAY OUT HOW

THEY'RE CHANGING AND WHAT YOU'RE DOING TO ADDRESS THAT?

KENT: WELL, I THINK, YOU KNOW, IT'S IMPORTANT TO REALLY STRESS THAT CONSUMERS ARE CHANGING RAPIDLY EVERYWHERE AROUND THE WORLD, NOT JUST HERE IN THE UNITED STATES. CONSUMERS ARE CHANGING IN CHINA. CONSUMERS ARE CHANGING IN RUSSIA. CONSUMERS ARE CHANGING IN WESTERN EUROPE AND LATIN AMERICA. EVERYWHERE, RAPID CHANGES. AND IT IS INCUMBENT UPON US WITH THE HERITAGE OF 125 YEARS TO MAKE ABSOLUTELY SURE THAT WE STAY AHEAD OF THOSE CONSUMER TASTES. AND WE HAVE A WONDERFUL, STRENGTHENED PORTFOLIO IN THE UNITED STATES AND WE HAVE DEMONSTRATED HOW WELL THAT PORTFOLIO IS PERFORMING, GAINING SHARE ALL THE TIME IN THE MARKETPLACE, AND I THINK THIS, WITH THIS TRANSACTION, WE WILL HAVE SUFFICIENT AMOUNTS OF SYNERGIES AND I CALL IT FUEL FOR OUR BRANDS THAT WILL ENSURE WE KEEP WINNING IN THE MARKETPLACE.

PAULSEN: MR. KENT, JUST A LITTLE BIT MORE MAYBE ON -- YOU MENTIONED THE MOVEMENT OF CAPITAL FROM PASSIVE TO ACTIVE FORM, BUT IS IT ANY REFLECTION ON MAYBE THE LACK OF OTHER ALTERNATIVE USES NOW FOR THE CASH FLOW WHETHER IT'S FOR OPERATING PURPOSES OR FOR OTHER POTENTIAL ACQUISITIONS? ARE THERE JUST NOT AS MANY COMING OUT OF THE RECESSION?

KENT: SURE. IT'S A GREAT QUESTION. ACTUALLY, THIS TRANSACTIONS ESSENTIALLY CASHLESS FOR THE COCA-COLA COMPANY. WE ARE USING OUR EQUITY IN CCE ASSUMING THE DEBT OF CCE AND THEN THE NEW FRANCHISES THAT WILL BE TAKEN OVER BY CCE IN WESTERN EUROPE, THOSE WILL BE ESSENTIALLY REALIZED IN CASH BACK TO THE COCA-COLA COMPANY FROM CCE SO, ESSENTIALLY, WHAT WE HAVE HERE IS A CASHLESS TRANSACTION. WHEN I SAY PASSIVE CAPITAL INTO ACTIVE CAPITAL, I MEAN THAT CAPITAL NOW ALLOWS US TO ENSURE THAT WE CAN GENERATE THE SYNERGIES AND LONG-TERM EFFICIENCIES THAT ARE CRITICAL FOR US TO WIN IN THE MARKETPLACE. THAT'S WHAT I MEANT.

QUICK: ALL RIGHT. CARL, DO YOU HAVE A QUESTION?

CARL QUINTANILLA: YEAH, MR. KENT. MR. BROCK TALKS ABOUT SOME OF THE GROWTH POTENTIAL FOR SPARKLING IN NORTH AMERICA IN PART BECAUSE OF THE MARKETING STEPS YOU'VE TAKEN OVER THE PAST COUPLE OF YEARS. WE KNOW YOU STUCK BY THE OLYMPICS WHERE OTHER BIG COMPANIES, OTHER BIG MULTINATIONALS DID NOT. HAS THAT PAID OFF? ARE YOU WILLING TO, ARE YOU READY TO TAKE MARKETING INTO A HIGHER GEAR GIVEN THE ECONOMIC RECOVERY THAT WE'VE WITNESSED?

KENT: I THINK OUR MARKETING HAS GONE INTO HIGHER GEAR, OPEN HAPPINESS CAMPAIGN IS NOW VERY SUCCESSFUL IN MORE THAN A HUNDRED MARKETS AROUND THE WORLD, AND WE -- THE PROPERTIES THAT WE ARE ASSOCIATED WITH, THE WONDERFUL PROPERTIES THAT OUR BRAND HAS BEEN ASSOCIATED WITH IN THE WORLD, LIKE THE OLYMPICS SINCE 1928, LIKE THE FIFA WORLD FOOTBALL CUP IN SOUTH AFRICA THIS YEAR, THOSE ARE LONG-TERM PLAYS THAT WE HAVE A VERY LONG STANDING RELATIONSHIP WITH THOSE PROPERTIES AND OUR CONSUMERS AND OUR BRANDS BENEFIT FROM THAT AND IT'S A MUTUALLY BENEFICIAL RELATIONSHIP WITH BOTH THE IOC AND FIFA.

QUICK: AND I GUESS EVENTUALLY, GENTLEMEN, CAN YOU TELL ME HOW THIS WILL CHANGE THE MARGIN STRUCTURE FOR EACH OF YOUR BUSINESSES?

KENT: WELL, FROM THE PERSPECTIVE OF THE COCA-COLA COMPANY AND ALSO THE OPERATIONS IN NORTH AMERICA, AS I SAID, THIS WILL ALLOW US TO REAP THE SYNERGIES WHEN WE PUT ALL THOSE BUSINESSES TOGETHER IT WILL ALLOW US TO BE BEST IN CLASS IN PRODUCTION, DISTRIBUTION, AND SALES, SERVE OUR CUSTOMERS AND CONSUMERS BETTER WITH OUR PORTFOLIO AND ENSURE THAT OUR BRANDS CAN KEEP GROWING IN THE WONDERFUL MARKET OF NORTH AMERICA, THE LARGEST PROFIT POOL IN THE WORLD. IN EUROPE I THINK US REFRANCHISING CRITICAL MARKETS, GERMANY, SWEDEN, NORWAY, ALMOST 100 MILLION CONSUMERS IN THOSE WONDERFUL MARKETS CONTIGUOUS TO THE TERRITORIES OF CCE TODAY, I HAVE NO DOUBT IS GOING TO CREATE FURTHER SCALE AND FURTHER ENERGIZE OUR BUSINESS IN THE CRITICAL WESTERN EUROPEAN MARKET, WHICH IS ANOTHER VERY, VERY LARGE PROFIT POOL

BROCK: LET ME JUST ADD TO THAT OUR PROFIT MARGINS IN EUROPE CCE ARE MEASURABLY HIGHER THAN THEY ARE IN NORTH AMERICA BECAUSE OF A WHOLE VARIETY OF REASONS. THE BUSINESS MODEL THERE IS MORE ROBUST AND SO FROM A NEW CCE STANDPOINT, CLEARLY YOU ARE GOING TO SEE DRAMATICALLY HIGHER PROFIT MARGINS ON AN ON GOING BASES. SO WE ARE OBVIOUSLY FROM A SHAREHOLDER STANDPOINT VERY EXCITED ABOUT THAT

QUICK: MR. BROCK, MR. KENT, THANK YOU BOTH VERY MUCH TIME. WE REALLY APPRECIATE YOU JOINING US AND FOR TALKING TO US ON THIS DEAL DAY.

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