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- Coca-Cola Amatil (CCL) is one step closer to a $9 billion takeover by its European counterpart
- On Monday, the Foreign Investments Review Board gave the green light for Coca-Cola European Partners to hoist the company
- The deal prices Amatil at $12.57 per share, but a price surge in last October means investors may want a renegotiation
- A number of hedge funds criticised the deal last year, saying it “undervalues” the company
- Amatil investors are meeting in April to vote on the deal
- Shares in CCL are grey in early morning trade at $13.11 each
Coca-Cola’s Asian Pacific division, Coca Coal Amatil (CCL), is set for a $9 billion takeover by the company’s European counterpart.
On Monday, the Australian Foreign Investments Review Board (FIRB) gave the green light to Coca-Cola European Partners to proceed with the buy.
Amatil bottles Coca-Cola-owned brands in Australia, New Zealand, Indonesia, Papua New Guinea, Fiji, and Samoa.
It stand as Australia’s largest bottler of soft drinks, waters, and juices.
The takeover deal prices Amatil at $12.57 per share, posing a huge discount to the company’s current $13.11 share price, which surged from $10.18 in October last year.
Approval from the FIRB is a huge win for the multi-billion-dollar deal, but a few boxes still need checking for it to be sealed.
“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”
Fergal Sarsfield, Setanta Senior Portfolio Manager.
For one, it will need approval from the New Zealand Overseas Investment Office. In addition, an independent review will be conducted to seek a fair deal in the interest of Amatil investors.
Due to the share price surge from October, this may see some changes to the deal or a longer wait period while details are negotiated.
Larger investors with their money in Amatil already spoke out on the deal “undervaluing” the company as far back as November last year — a push could be expected on the $9 billion price tag this year.
“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, a Setanta Senior Portfolio Manager.
Setanta Asset Management is one of the few hedge funds that are invested in Amatil.
“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,” Sarsfield also said.
Other hedge funds that have criticised the price include Antares Capital, Pendal Group, and Martin Currie Australia.
Amatil shareholders are currently planning to meet in April to vote on the deal.
The overarching Coca-Cola Company cannot vote on the deal, meaning retailer investors have a strong say. It would only take 11.6 per cent of shareholders to block the takeover.
A scheme of arrangement for the deal will be drafted this month.
Shares in CCL on the Australian market are grey in early morning trade at $13.11 each.
