Coca-Cola Amatil has signed a binding scheme implementation deed with Coca-Cola European Partners, moving the Amatil takeover process forward.
Amatil will be liable for a break fee of $46.4 million payable to CCEP if the transaction does not go ahead.
The drinks company confirmed last month that it had received a $9.3billion buy-out offer from Coca-Cola European Partners (CCEP).
Coca-Cola European Partners has completed due diligence and has obtained relief from the Australian Securities and Investments Commission in relation to its deal to acquire The Coca-Cola Co’s 30.8% stake in a separate transaction.
As a result of this agreement with TCCC, CCEP now has a relevant interest in 30.8% of the shares in Amatil.
Amatil’s independent directors, including managing director Alison Watkins, have unanimously recommended that shareholders vote in favour of the scheme.
CCEP chief executive Damian Gammell said: “This is a fantastic opportunity to bring together two of the world’s best bottlers to drive faster and more sustainable growth.
“Since the creation of CCEP four years ago, we have proven our ability to create value through expansion and integration. Now is the right time to move forward by taking on these great franchises and markets.
“I am eager to apply our proven formula in western Europe to Coca-Cola Amatil’s markets, including leadership in areas such as revenue growth management, in-market execution, digital and sustainability.
“However, I am equally excited and genuinely convinced that there will be many more opportunities as we move forward together with speed, scale, excellent people and a richer, more diverse culture.
“This larger platform will unlock enhanced value for our shareholders, all underpinned by an even stronger and more aligned strategic partnership with The Coca-Cola Company and our other brand partners.”
Offer details will be sent to shareholders in February and shareholders are expected to vote on the scheme of arrangement in March.
If the scheme is implemented, independent shareholders will receive total cash consideration of $12.75 per share.
The Amatil takeover requires approval from 75% of Amatil’s independent shareholders and also needs clearance from the Foreign Investment Review Board.
Asahi faced a major battle with its bid to receive approval from the FIRB for its recent purchase of CUB. It was required to sell cider brands Strongbow, Bonamy’s and Little Green and the Australian rights to beer brands Stella Artois and Beck’s.
Heineken purchased the portfolio last week in a deal the Australian Financial Review said is believed to be worth more than $200 million.
CCEP eyes Amatil’s alcohol expertise
CCEP recently introduced Top Chico Hard Seltzer in Europe and Beverage Daily speculates that it “plans to take Amatil’s expertise in alcohol and apply it to the European market”.
“While the core category for both businesses is non-alcoholic ready-to-drink, the transaction would methodically strengthen and broaden our current portfolio, not just within that category, but in the acquisition of wider capabilities in alcohol and coffee.
“If you look at the size and the scope of Amatil’s alcohol business, we believe there’s a lot of learning there. That’s one of the beauties of this deal.”
In a trading update last month, Amatil said its results improved in the September quarter, down 4.2% year on year, an improvement on the 1H20 decline of 9.2%.
In Alcohol, spirits were up 23.1% in 3Q20 driven by the Jim Beam trademark and continued strong at-home consumption. Beer and Cider in 3Q20 were up 2.8% year on year, with strong performance by Feral in Western Australia.
Amatil said it was “well placed to capitalise on the all-important 4Q20 Christmas trading period”.
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