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.