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ASX-listed Coca-Cola Amatil would be sold to the European arm of Coca-Cola for $9.3 billion under a shock deal proposal

Business Insider Australia logo Business Insider Australia 10/26/2020 Darren Gray, SMH
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ASX-listed drinks giant Coca-Cola Amatil would be sold to the European arm of Coca-Cola under a shock $9.3 billion deal proposed by the European business that would see the entire Amatil business sold.

Under the proposed deal, unveiled in detail by Coca-Cola Amatil this morning, Amatil shareholders would receive $12.75 cash per share, which equates to a 23 per cent premium to the one week volume weighted average price of its shares.

Coca-Cola Amatil shares last traded on Thursday last week at $10.75, before the company requested a trading halt in its shares early on Friday morning, pending an announcement about a "material" transaction. Shares in the company soared 15 per cent at the open on Monday morning. At 10.04am AEDT, shares are fetching $12.34.

No details were made available on the day, but instead speculation centred on the possibility that the announcement was tied to Amatil's potential interest in buying a number of drink labels from Japanese brewer Asahi.

The implied equity value of the proposed $12.75 per share cash offer is $9.28 billion. The enterprise value of the offer from Coca-Cola European Partners for Amatil, including debt is $10.87 billion.

The deal to buy the Amatil shares would be via a scheme of arrangement. Coca-Cola Amatil's independent directors intend to unanimously recommend the proposed scheme of arrangement, subject to a range of conditions.

To acquire Amatil in full, the European arm would also have to acquire the stake in Amatil held by the international drinks giant The Coca-Cola Company (TCCC), based in Atlanta.

Documents released this morning suggest that The Coca-Cola Company supports the deal. Amatil released a letter indicating that on October 25 the US parent and the European arm of Coca-Cola entered into a "co-operation letter" in respect of the proposed deal.

The Coca-Cola Company currently owns about 30.8 per cent of Amatil’s shares, and as a result of the co-operation letter the US drinks giant and the European arm have become associates in respect of Coca-Cola Amatil. This means that the European arm now has 30.8 per cent voting power in relation to Amatil’s shares.

This story originally appeared in the Sydney Morning Herald. Read the original story here.

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