Coca-Cola European Partners swoop a headache Coca-Cola Amatil’s beer play

Cans of coke are seen at the Coca Cola factory in Melbourne. Picture: AAP Image

A potential $9bn-plus takeover offer of Coca-Cola Amatil by Coca-Cola European Partners is shaping up as a defensive play by the European drinks company that is facing a major blow to earnings as COVID-19 runs rampant on the continent.

Coca-Cola Amatil entered a trading halt on Friday pending a material transaction, with its shares last trading at $10.75 and its market value at $7.78bn and it is believed to be in talks with Coca-Cola European Partners. Coca-Cola Amatil is trading at a 18 per cent discount to its 12-month peak.

Market players at the weekend said that the logic for a bid by Coca-Cola European Partners for Coca-Cola Amatil is that it anticipates tough times ahead for sales in its local market where COVID-19 is crippling the hospitality and events industry.

A pending acquisition now shines the spotlight on Asahi’s $16bn acquisition of Carlton United Breweries.

Coca-Cola Amatil had been in negotiations to buy beer brands Stella Artois and Beck’s from Japanese drinks group Asahi, with final bids due some time ago.

Working on the sale of the Asahi drinks was Rothschild, which is also believed to be advising Coca-Cola European Partners.

The thinking is that Coca-Cola European Partners would be against any deal involving Coca-Cola Amatil acquiring a beer business, given that it tends to steer clear of the alcoholic beverages market.

Asahi needs to sell some beer and cider brands to appease the Australian Competition and Consumer Commission, and while Heineken, which has a joint venture in Australia with Lion, is believed to be eager to buy the cider brands, it is not believed to be keen to buy the beer.

Macquarie Capital had been working for Coca-Cola Amatil to buy the beer brands, but UBS is defending the Australian listed bottling company.

Australian-based private equity firm Advent Partners, which owns Tribe Breweries and has a partnership deal with the beer brand Young Henrys, had earlier been competing for the Asahi beer brands with adviser Record Point and the latest development may now see it return to the competition.