CCEP proposes to acquire Coca-Cola Amatil

by Jonathan Adams
Coca-Cola Amatil

The terms offered to The Coca-Cola Company (TCCC) would be less favourable than the terms offered to the independent shareholders

Multinational bottling company, Coca-Cola European Partners (CCEP), has proposed to acquire NSW-based drink company, Coca-Cola Amatil.

The proposal would call for the acquisition of all issued shares held by independent shareholders of Amatil and the separate acquisition of Amatil shares held indirectly by The Coca-Cola Company (TCCC) which comprises all of the issued share capital of Amatil.

The proposal, according to Amatil, is for an all cash offer to be made to independent shareholders of $12.75 per share, less any final dividends in respect of 2H20 declared and paid to Amatil shareholders before the date of implementation of any scheme.

The proposal also contemplates CCEP entering into a separate agreement to acquire TCCC’s Amatil shares i.e. a Scheme Implementation Deed (SID).

The terms offered to TCCC, according to Amatil, would be less favourable than the terms offered to the independent shareholders.

TCCC has reportedly carefully considered the proposal and has obtained advice from financial and legal advisors.

This latest proposal follows a number of previous proposals from CCEP and remains conditional.

Amatil said CCEP has been provided with selected value based information and identified due diligence parties have negotiated key commercial terms that would form part of any SID.

The RPC has considered the proposal with the objective of maximising value for the independent shareholders and has unanimously determined that, based on the current price and conditions of the Proposal, it is now in the best interests of independent shareholders to allow CCEP to undertake confirmatory due diligence and further negotiate transaction documentation in order to determine if a binding proposal can be presented to independent shareholders, said Amatil Chair, Ilana Atlas.

If confirmatory due diligence is completed, other conditions satisfied (including CCEP and TCCC entering into an agreement in relation to the acquisition of TCCC’s shares by CCEP) and an acceptable SID is negotiated, Amatil’s RPC, together with Group Managing Director Alison Watkins, intend to unanimously recommend the scheme to independent shareholders, in the absence of a superior proposal and subject to an independent expert concluding, and continuing to conclude, that the scheme is fair and reasonable and in the best interests of independent shareholders, she said.

CCEP is a leading consumer goods company, a strategic bottling partner to TCCC in Western Europe, and the world’s largest independent Coca-Cola bottler by revenue.

CCEP operates in 13 countries, serving one million outlets, over 300 million consumers and employing over 23,300 people.

CCEP was formed in 2016 through the merger of the bottling operations of Coca-Cola Enterprises, Coca-Cola Iberian Partners and Coca-Cola Erfrischungsgetranke. Its experience through that merger demonstrates its ability to execute major transactions and smoothly integrate Coca-Cola bottlers.

In 2019, CCEP generated revenue of €12.0 billion and underlying operating profit of €1.7 billion. CCEP is publicly listed on stock exchanges in Amsterdam, New York, Madrid and London, with its corporate headquarters in London.

Amatil, in a trading update, has advised it will no longer provide an update on 2 November 2020.

It is pleasing to report that we are seeing earnings momentum return in markets where Covid-19 trading restrictions have eased, including continued recovery in ‘On-the-Go’ (OTG) channels, said Amatil Group Managing Director, Alison Watkins.

This has particularly been the case in Western Australia and New Zealand which have both delivered growth in [Q3 2020], providing insight on the expected shape of the recovery that can be expected in other markets most notably in other Australian States where restrictions have been slower to ease, she said.

Trading conditions continued to improve in the third quarter of the 2020 financial year (3Q20) with group trading.

Revenue down 4.2 per cent in Q3 2020 compared to the prior corresponding period, an improvement on the decline of 9.2 per cent reported by the company at its half year 2020 (1H20) result.

Group volume was down 5.4 per cent on Q3 2019, again an improvement on the 11.6 per cent decline reported at 1H20 and a significant improvement on the April decline of 33 per cent.

The group’s trading revenue for 1H20 was 2,185.9 million AUD, while Q3 2020 was 1,105.8 million AUD. Year to date as at 25 September: 3,291.7 million AUD.

It is pleasing to see the improvement in revenue momentum in [Q3 2020] despite the reinstatement of lockdown restrictions in Victoria and Auckland for a significant part of the quarter, said Watkins.

This momentum has continued in the first three weeks of October with our Australia and New Zealand businesses both delivering volume growth (up +1.5 per cent and +1.8 per cent respectively), Watkins said.

Amatil’s Australian business experienced an improvement in trading conditions throughout Q3 2020 albeit with a marked difference in recovery rates across states reflecting differing levels of Covid-19 restrictions.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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