Coca-Cola Amatil backs sweetened European Partners takeover offer

Coca-Cola European Partners hopes an extra $500m will win over reluctant Amatil investors, and already has the bottler on board.

The improved Coca-Cola European Partners offer has won approval from Coca-Cola Amatil chief executive Alison Watkins. Picture Ryan Osland

Coca-Cola Amatil shareholders who dug in over what they viewed as a low-ball takeover from Coca-Cola European Partners have secured an extra $379m after the European bottler upped its October takeover offer to $9.8bn to drag it over the line.

And once again it was US parent The Coca-Cola Company, a major shareholder in both takeover suitor and target, that played matchmaker with the Atlanta-based drinks maker, so keen — or desperate — to get the deal done it will swallow a steep discount to the higher all-cash offer of $13.50 per share and leave hundreds of millions of dollars on the table.

The improved offer from Coca-Cola Europe was against an initial bid of $12.75 per share launched last year and has similarly won approval from an independent committee of CC Amatil directors as well as chief executive Alison Watkins.

Coca-Cola Europe is looking to form a bottling giant stretching from Britain to Australia, taking in New Zealand, Papua New Guinea and parts of the South Pacific, and those dreams now look more of a reality as it sweetened its bid.

Investors, minority shareholders and analysts had been pushing for a much fatter offer from the Europeans almost as soon as the bid was launched in October. That pressure steadily built as the CC Amatil share price sped away from the $12.75 offer and then accelerated after the bottler unveiled an bullish trading update in January.

The sweetened takeover price values CC Amatil at $9.8bn, up from the initial bid value of $9.5bn, and derives an enterprise value of $11.08bn for the soft drink, bottled water, juice, coffee and alcoholic beverages business.

The Coca-Cola Company has a 30.4 per cent stake in CC Amatil and has agreed to pocket as little as $9.57 a share for a third of its position and potentially roll the rest into its 19 per cent share in Coca-Cola Europe. But under Monday’s new takeover offer it will also not take up the extra price of $13.50 for its remaining two-thirds stake, keeping the already agreed price of $10.75 per share.

This means all of the uplift from the higher offer will be handed to independent CC Amatil shareholders who will share in an extra $379m. The Atlanta-based parent company has not explained the reason for this generosity, and is seen by many as a signal of its eagerness to combine the operations of its European and Australasian bottlers.

Damian Gammell, chief executive of Coca-Cola European Partners, said the higher takeover offer represented a “compelling” deal.

“We are excited by the opportunity to bring together two of the world’s best bottlers to drive more sustainable growth,” Mr Gammell said.

“This is a strategically compelling transaction which will solidify our position as the largest Coca-Cola bottler by revenue.

“Through this expanded platform and Coca-Cola European Partners’ proven formula, we will create further value for our shareholders, all underpinned by an even more aligned strategic partnership with The Coca-Cola Company and our other brand partners.

“We look forward to a stronger future together. We will build on our collective strengths through excellent people, a diverse culture, leading commercial capabilities and our commitment to sustainability.”

Coca-Cola European Partners has declared the improved $13.50 per share offer its best and final offer.

It is believed some of the key institutional shareholders that were planning to reject the original offer price have since sold down their positions to under 3 per cent of the issued capital.

Shares in CC Amatil rallied on the back of the better offer, closing up 28c at $13.41.