When the Foreign Investment Review Board (FIRB) cleared the proposed $9 billion acquisition of Coca-Cola Amatil, it was a win for its European counterpart and Europe’s biggest Coca-Cola bottler, Coca-Cola European Partners (CCEP).
On Monday the FIRB gave the green light and confirmed the Commonwealth has no objection to the wholly-owned subsidiary of CCEP acquiring 100 % interest in the company, satisfying one of the conditions precedent to implementing the scheme.
Amatil bottles Coca-Cola owned brands in Australia, New Zealand, Indonesia, Papua New Guinea, Fiji and Samoa and is Australia’s largest bottler of soft drinks, waters and juices.
The scheme is still subject to conditions including approval from the New Zealand Overseas Investment Office and an independent consultation concluding the scheme is fair and in the best interests of independent shareholders as well as approval from Amatil shareholders who are planning to meet in April 2021 to vote on the deal.
The government has not indicated they have any concerns with the acquisition in contrast to last August when the FIRB approved a $600 million takeover of dairy and drinks company Lion by China Mengniu Diary Co was blocked by Treasurer Josh Frydenberg. He said the foreign takeover would be ‘contrary to the national interest’.
CCEP is under pressure to increase the $12.75 share offer because shares have been trading above the offer since December to $13.11 this morning. In October 2020 the share price jumped 16 per cent from $10.18 on the takeover bid announcement.
Amatil shareholders and hedge funds including Dublin-based Setanta Asset Management, Martin Currie Australia, Antares Capital and Pendal Group criticised the offer saying it undervalues the business.
“Amatil’s management team have worked tirelessly to develop the company, and the offer of $12.75 per share does not reflect the strength and value of the business,” said Fergal Sarsfield, Setanta Senior Portfolio Manager.
“The offer from [European Partners] fails to take into account the successful transformation program that is already underway in [Coca-Cola’s] Australian beverages division, in addition to the strength of the business in New Zealand and growth potential in Indonesia.”
The overarching Coca-Cola Company cannot vote on the deal, so retailer investors are in a strong position. It would take just 11.6 per cent of shareholders to block the takeover.
A scheme of arrangement for the deal will be drafted this month.