Amatil’s sale to CCEP has been in the works for several months now, with CCEP having adjusted its offer price to a ‘best and final’ offer of A$9.8bn (US$7.6bn) or A$13.50 (US$10.45) a share earlier this year.
The takeover (referred to in official documentation as the ‘Scheme of Arrangement’) will finally be put to the vote next month on April 16 2021, and in advance of this Amatil has issued a formal Scheme Booklet containing details of the potential transaction, also simultaneously formally urging shareholders to vote in favour of the CCEP takeover.
“The Amatil Related Party Committee [unanimously recommends] that independent shareholders vote in favour of [this takeover], and Amatil Group Managing Director Alison Watkins also recommends [the same],” Amatil said via the Scheme Booklet, which FoodNavigator-Asia has viewed.
“Amatil also appointed Grant Samuel & Associates Pty Limited as the Independent Expert to assess the merits of the Scheme [and it has] concluded that the Scheme is fair and reasonable and accordingly is in the best interests of [the shareholders], in the absence of a superior proposal.”
The consultancy assessed the full underlying value of Amatil shares at between A$12.68 (US$9.80) and A$14.01 (US$10.83) per Share, determining the total cash amount of A$13.50 offered per share to be ‘within the upper half of this range’.
“Over the five years up to (and including) 22 October 2020, [Amatil’s] volume-weighted average price (VWAP, a measure of the average price at which a stock is traded) was A$9.29 (US$7.18), [and] the highest closing share price was $13.07 (on 20 February 2020) - which is below the total cash amount of $13.50 per Amatil Share offered to Independent Amatil Shareholders.
“[So] the total cash amount of A$13.50 per share offered represents an attractive premium to Amatil’s historical trading prices as well as broker price targets [and] equates to an attractive acquisition multiple that generally compares favourably to comparable [transactions].”
Amatil also pointed out that the shares are currently still subject to market volatility – especially in the current uncertain COVID-19 period – and if the takeover does not take place and no ‘superior proposal’ emerges, share prices may fall.
“Since the announcement of the Initial CCEP Proposal, no Superior Proposal has emerged – [if] the Scheme proceeds, shareholders will [avoid] ongoing risks and uncertainties associated with their investment in Amatil’s business,” said the firm.
“[Shareholders] will not incur any brokerage charges on the transfer of Amatil shares if the Scheme proceeds. [If] you wish the Scheme to proceed, it is important that you vote in favour.”
All shareholders must be registered by 14 April 2021 to participate in the vote. These are only limited to independent holders of Amatil shares, and not members of The Coca-Cola Company (TCCC) Group (which owns some 30.8% of Amatil shares).
“Members of TCCC Group [are] excluded from and not permitted to vote on or participate in, the Scheme,” said Amatil.
“The TCCC Amatil Shares are proposed to be separately acquired by CCEP Group under [a separate] Co-Operation and Sale Deed.”
Amatil has declined to directly comment on the transaction, citing the fact that it is ‘still in play’, but the firm’s Group Head of Sustainability Mary Ann van Bodegraven revealed to FoodNavigator-Asia that ‘no major changes are expected’ to be made to the firm’s recently-announced 20-year sustainability ambitions even if the takeover goes through next month.
Expert analysis
Amatil’s Scheme Booklet was accompanied by the full analysis report from Grant Samuel & Associates, which elaborated on the reasons CCEP’s offer is considered ‘fair and reasonable’.
“The emergence and likely aftermath of the COVID-19 pandemic has introduced a significantly higher level of uncertainty. Amatil’s earnings in FY20 have fallen sharply particularly in the on-the-go channel as a result of the closure of venues (pubs, clubs, restaurants, cafes), cancellation of events and the virtual shut down of tourism,” said the analysts.
“The path to full recovery is unclear both as to timing and extent. In these circumstances, it is unrealistic to be precise or definitive about value at the current point in time.
“[Our analysis of the Scheme has] found it to be fair, is also reasonable and in the best interests of shareholders in the absence of a superior proposal.”
The report also sought to allay the worries of shareholders concerned that a better offer than CCEP’s might appear, calling this situation ‘unlikely’.
“It is conceivable that a third party could make a higher offer for Amatil [but in our] opinion this is unlikely – [One of the reasons for this is that] TCCC’s 30.8% shareholding in Amatil together with the nature of the bottlers’ agreements is an impediment to any hostile proposal [meaning] that an acquirer is highly unlikely to succeed without TCCC’s ‘blessing’,” said the analysts, citing a previous unsuccessful attempt in 2008/2009 by Lion Nathan (backed by Kirin) to acquire Amatil.
“TCCC has reached an accommodation with CCEP in relation to its proposal. CCEP is regarded as one of the most successful bottlers within the Coca Cola global bottler network and is likely to be perceived by TCCC as the best party to drive volume and market share (which are key concerns for TCCC).
“It is highly unlikely that any non Coca-Cola bottler (or non beverage business) could offer the same perceived operational benefits to TCCC.”
It was also highlighted that any higher offer is unlikely to be forthcoming from CCEP, as it has already stated the A$13.50 price to be its ‘best and final’ offer, so the analysts have concluded that: “There is no prospect of a higher offer from CCEP.”
