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Bridget Carter

Coca-Cola European Partners taps Credit Suisse to lead Coca-Cola Amatil bid

Bridget Carter
The takeover bid for Coca-Cola Amatil is believed to be no obstacle to its planned purchase of beer brands from Asahi. Picture: Joel Carrett
The takeover bid for Coca-Cola Amatil is believed to be no obstacle to its planned purchase of beer brands from Asahi. Picture: Joel Carrett

Coca-Cola European Partners is understood to have tapped investment bank Credit Suisse to lead a banking syndicate to fund its $9.3bn takeover bid of Coca-Cola Amatil.

It is understood that the Swiss bank was leading a consortium of lenders to provide financing for the transaction, as revealed online by DataRoom on Monday, and is underwriting the transaction.

The banking syndicate on Monday was being finalised.

Coca-Cola Amatil has confirmed that the European soft drinks giant had lobbed a $12.75-a-share takeover bid for the business, equating to a market value of just under $9.3bn. Its shares last traded before the offer at $10.75.

 
 

The proposal has emerged after Coca-Cola made a final offer to buy beer brands Stella Artois and Beck’s from Japanese brewer Asahi.

While some thought the bid would scupper the beer acquisition, it is understood that Coca-Cola European Partners is comfortable allowing the transaction by Coca-Cola Amatil to proceed and is hoping to capitalise on its target’s skills investing in alcohol.

Coca-Cola European Partners has typically shied away from investing in alcohol, although it has launched a new alcoholic beverage brand in Europe.

Asahi needs to sell some beer and cider brands to appease the Australian Competition & Consumer Commission.

The Japanese brewer is advised by Rothschild, which is also advising Coca-Cola European Partners, while Coca-Cola Amatil is receiving defence advise by investment bank UBS.

Coca-Cola European Partners has been in talks with Coca-Cola Amatil about an acquisition for 18 months, with the discussions said to be on-again, off-again and it is understood that the target has not received any other approaches from other suitors for a long period of time and chances of a rival bid are low.

The Coca-Cola Company owns a 30 per cent stake in Coca-Cola Amatil, which it will sell at a price discounted to the offer price to Coca-Cola European Partners, of which it also holds an interest.

Morgans analyst Belinda Moore said in a research note that the $12.75-a-share offer was somewhat opportunistic, given that Coca-Cola Amatil’s share price had been affected by COVID-19.

But while there is a chance an activist investor could get on the register and join forces with other independent shareholders to lobby for a higher price, it is thought unlikely.

Some have said the deal signals a lack of confidence in the performance of Coca-Cola Amatil under its current management by The Coca-Cola Company. However, market experts say Coca-Cola Amatil is in an impossible position, because when it develops local brands, the company is under pressure to sell those brands to The Coca-Cola Company.

But without its own local brands, it has no economic independence from The Coca-Cola Company, which faces pressure as the dominance of the Coca-Cola soft drink diminishes as consumers opt for healthier drinks alternatives.

Benefits exist in consolidating the businesses through cheaper financing and access to talent.

The transaction price at $12.75 a share equates to 14.3 times its 2020 forecasted earnings before interest, tax, depreciation and amortisation on an enterprise value basis.

Bridget Carter
Bridget CarterDataRoom Editor

Bridget Carter has worked as a writer and editor for The Australian’s DataRoom column since it was launched in 2013, focusing on capital markets, mergers and acquisitions, private equity and investment banking. She has been a journalist for more than 18 years, covering a broad range of events and topics, including high profile court cases and crimes, natural disasters, social issues and company news.

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Original URL: https://www.theaustralian.com.au/business/dataroom/takeover-no-barrier-to-cocacola-amatils-asahi-beer-buy/news-story/8df7996e668c6d2d2ae9de48d1d57160