Foreign Investment Review Board clears way for proposed $9.3bn takeover of ­bottler Coca-Cola Amatil

The Foreign Investment Review Board has cleared the way for the proposed $9.3bn takeover of ­bottler Coca-Cola Amatil by Coca-Cola European Partners.

Picture: NCA NewsWire/Joel Carrett

The Foreign Investment Review Board has cleared the way for the proposed $9.3bn takeover of ­bottler Coca-Cola Amatil by Coca-Cola European Partners, although the bid still remains on a knife edge as CC Amatil’s share price continues to race away from the offer price and pressure grows for the takeover price to be ratcheted higher.

Coca-Cola European Partners launched its $12.75-a-share bid in November, but an improvement in trading conditions for target CC Amatil and last week’s positive trading update has helped lift the share price and raise doubt the takeover will succeed.

The giant European bottler will issue its latest trading results and 2020 profit report on February 11 and might at that time update the market on the prospects of its takeover and whether it will sweeten the deal to win over CC Amatil shareholders and get it over the line.

In the meantime, CC Amatil announced on Monday that the Foreign Investment Review Board had determined that the commonwealth had no objection to a wholly owned subsidiary of Coca-Cola European Partners acquiring an interest of up to 100 per cent in the company.

“Receipt of FIRB approval satisfies a condition precedent to the implementation of the scheme,” CC Amatil said.

“The implementation of the scheme remains subject to certain other conditions as disclosed to the market on November 4, 2020, including approval from the New Zealand Overseas Investment Office, an independent expert concluding [and continuing to conclude] that the scheme is fair and reasonable and in the best interests of independent shareholders, Amatil independent shareholder approval and Australian court approval.”

But there is shareholder pressure for a higher bid, and the market looks to be betting on a higher offer coming with shares in CC Amatil trading above the takeover offer since Christmas.

On Monday CC Amatil closed 3c higher at $13.11.

Last week CC Amatil added to that pressure, announcing that the easing of restrictions and lockdowns, especially in Victoria, had helped a turnaround of CC Amatil’s flagship Australian beverage arm, although strong “at home” consumption as people drank at home saw sales weighted to the grocery channel for CC Amatil, which typically has smaller margins.

CC Amatil said it was expecting it would deliver fiscal 2020 ongoing EBIT (before non-trading items) of $550.7m, down 13.9 per cent on 2019 and 2020 ongoing net profit of $340.3m. This preliminary result includes the delivery of $140m of cost savings in accordance with the efficiency initiatives announced by the company at the start of the COVID-19 pandemic.