Coca-Cola Amatil gets green light for $9b takeover
Drinks giant Coca-Cola Amatil has received the green light from Australia’s foreign investment board for its $9 billion tie-up with Coca-Cola Europe as analysts and shareholders continue to push for a better offer from the company’s overseas stablemate.
In October, Coca-Cola Amatil announced it was supporting a shock offer from Coca-Cola European Partners (CCEP) to acquire 100 per cent of the business at $12.75 per share, an offer that at the time marked a 23 per cent premium to the stock’s one-week volume-weighted average price.
Coke Australia told investors on Monday morning the Foreign Investment Review Board (FIRB) had no objection to the deal, an outcome that was widely expected by the company and investors.
However, the local bottler warned the FIRB clearance was only one part of the lengthy process of finalising the deal, which is yet to be approved by shareholders with a vote expected to be held in March.
A tick is still required from the New Zealand Overseas Investment Office, and the deal will also need to be deemed in the best interest of shareholders by an independent expert review.
Analysts are keenly awaiting the outcome of this independent review, as many market-watchers are currently agitating for a higher offer price for the local company, pointing to its better-than-expected performance during COVID.
Last week, Coke Australia revealed its earnings for the 2020 calendar year would ring in at $550.7 million, nearly $50 million higher than what analysts had expected thanks to a lift in volumes through the December quarter.
Belinda Moore, analyst at Morgans, told The Age and The Sydney Morning Herald she was hoping for a $14 per share offer from CCEP given the improved result.
“Coca-Cola Amatil is recovering nicely post-COVID restrictions and they’re taking costs out of their cost base, so they’re going to come out of this with market share wins and higher margins,” she said. “So we think the $12.75 per share offer is not enough.
“It’ll be interesting to see the independent experts’ report and how they value Amatil, and whether they think it’s enough given that most analysts in Australia think it’s too low.”
However, CCEP has previously said it believes the original offer is a fair price and that it has no intention of bidding against itself. Coca Cola Amatil shares rose 0.4 per cent to $13.14 on Monday.
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.
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