Coca-Cola Amatil chair Ilana Atlas should take Warren Buffett’s advice and take the European cash to the bank and run as fast as she can, because it seems $12.75 a share, sadly, is as good as it gets.
More to the point, it is backed by 30 per cent shareholder Coca-Cola Company (Atlanta) at a lower price and makes you wonder just why the Europeans are going through the due diligence process.
The downside is the UK-based bottler sees merit in paying top dollar for an Australian company that for a range of reasons has frankly wasted its opportunities
Twelve years ago Rob Murray at Lion Nathan bid $10.80 a share for Amatil but was rejected by Atlanta. And in the decade and a bit since, all Amatil has done is grow the offer by 18 per cent.
That is not a great return, and little wonder.
Forget COVID-19 — its impact, while real, is an event this year and next — but consumer preferences have fundamentally shifted away from Coke and that is a more fundamental switch.
In 1998, Amatil sold its many European bottling assets into a listed vehicle because it was all too hard and now a Spanish-owned western European bottler wants to do the reverse.
The deal has zero synergies and just maybe it also highlights the lack of imagination in Australian company management.
Before Alison Watkins’ reign as Amatil chief executive, Terry Davis wanted a “bigger share of throat” so he moved into SPC, bottled water and beer. SPC failed, water has prospered and beer and coffee are certain to be sold by the Europeans once they win control.
There are Asian bottlers up for grabs right now, but these are effectively off-limits, it seems, and instead an Australian company is about to fall to a UK-based bidder.
In part this is a problem for Australian investors who have long failed to back the long-dated returns on offer from Asian investments. Amatil’s 70 per cent stake in Coke Indonesia should have served as a base for more Asian investments, but has never really delivered.
The bidder’s chair is Sol Daurella, whose family is the Spanish-based major shareholder that has built an empire.
This company has long been an investment banker’s dream when you consider in 1998, when the once British Tobacco controlled Amatil spun off its eastern European bottling assets, it picked up and later sold the South Korean bottling assets.
The move again came with the support of Atlanta, which depending on who is running the shop in the US either wants to take control of the bottling assets or sell them.
What it wants most of all is to maximise the sale of its syrup whichever way possible and the European takeover of Australia must look more appealing to the folk in Atlanta.
The $10.8bn bid is at an impressive multiple of 19 times forecast earnings and the offer price some 27 per cent above analyst target prices.
The Europeans have been knocking on the door for 18 months, but with Amatil up 13 per cent in the month to Friday and 5.5 per cent last week, the word was clearly out in the market.
Watkins has had a good few days, got a good selling price for her shareholders and, with 335,364 ordinary shares plus up to 1.1 million rights, a $15m payday looms and a fabulous win for her Richmond football club.
Life on the farm back in Victoria beckons, along with some director seats.
ASIC’s bad timing
ASIC’s reported leadership woes were not helped by timing, coming in the same week Scott Morrison was hit with advice he had paid $33m for a block of land outside Sydney worth $3m.
Then there was the Christine Holgate snafu at Australia Post that has been well canvassed here.
The ASIC pair, chair James Shipton and Daniel Crennan, handled the issue badly, which is not to say they were improper, they just didn’t make things easier for themselves or ASIC and its staff.
The best solution was to put both issues before the Remuneration Tribunal to arbitrate, then to follow its recommendations to the letter. This wasn’t done, so the politicians got involved and the consequent noise makes life tough for staff and the agency
One former deputy is gone but four commissioners are left, all it should be noted, with considerably more commercial experience than voluble former E&Y accountant senator Andrew Bragg, who worked for seven years as a policy adviser to the Financial Services Council on behalf of its retail super members.
There are now four people on the bench at the commission, including former corporate lawyers Sean Hughes (Tabcorp, NAB, ANZ) and Cathie Armour (Macquarie Capital, JPMorgan) along with Danielle Press (RBA, Myer family, Equipsuper) and acting chair Karen Chester, who among other roles ran Access Economics and was head of global infrastructure at Mercer.
The Prime Minister appointed both Shipton and Crennan and Josh Frydenberg the other commissioners.
The argument against both Shipton and Crennan is they accepted benefits to which they were not entitled.
In Shipton’s case, ASIC had agreed to a figure to cover his tax affairs and that was exceeded.
Crennan and Shipton were both appointed for five years from July 2018, which meant they agreed to act in the public interest in their roles.
The question then becomes — is it in the public interest for Crennan to leave now, having confided he was always planning to leave two years early anyway, and the short answer is no. He has left.
Shipton is a highly principled person who will decide whether he has compromised his role.
The government has already made one earlier call by bizarrely instructing prudential regulator APRA to be a conduct regulator on the issue of bank responsible lending.
By April next year the government will have installed its new regulatory oversight body as recommended by the Hayne royal commission, with former ACCC boss Graeme Samuel an ideal candidate for the position.
Next move for Chess
Drum roll please: this week ASX boss Dominic Steven will tell the market how long he plans to delay the introduction of his much-vamped Chess replacement system from the proposed April 2022 start date.
The proposed December start date for the trial may also be delayed and, in a blow to the big brokers, with the delay on the Chess replacement the much-awaited start of the global messaging system ISO2022 will also be held off.
Marley Spoon free fall
Food service provider Marley Spoon’s share price has gone into free fall on the same day the company said it had successfully raised $56m at $3.22 a share.
The stock closed down 32 per cent at $2.36.
Having listed at $1.42, it has spent much of the past three years below $1 before skyrocketed to $3.50 in September, and the fall is attributed to a switch to online high flyers like Temple & Webster.
The company said last week its earnings performance was strong but it also said founder Fabian Siegel would sell 750,000 shares at the $3.22 offer price.
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