CCEP to bottle a deal with CCL

Coca-Cola European Partners (CCEP) has submitted a non-binding offer to buy a 69.2 per cent stake in Australia-based bottling company Coca-Coca Amatil (CCL) for AUD 9.28 billion (USD 6.62 billion). The acquiror will pay AUD 12.75 per share, representing a premium of 18.6 per cent to the target’s close of AUD 10.75 on 22nd October 2020, the last trading day prior to the deal being announced. The consideration also implies a multiple of 10.9x CCL’s enterprise value and earnings before interest, tax, depreciation and amortisation for the fiscal year 2019. Furthermore, the buyer has entered into a non-binding heads of terms and cooperation letter with the Coca-Cola Company (KO), to purchase the latter’s 30.8 per cent stake in the target. Under the terms of the proposal, CCEP is offering AUD 9.57 per share in cash, which comprises 10.8 per cent of the group’s stock. The company will work with KO to acquire the remaining 20.0 per cent stake in CCL. Headquartered in Sydney, the target claims to be one of the world’s largest bottlers of alcoholic and non-alcoholic beverages. CCL prepares, sells and distributes 30 brands, including Fanta, Appletiser and Sprite, to 111,000 customers worldwide. During the six months ended 26th June 2020, the group posted revenue of AUD 2.21 billion, down 9.1 per cent from AUD 2.43 billion in the corresponding period of 2019. The proposed deal would create a broader and more balanced footprint for CCEP and double its consumer reach, with the aim of driving growth through geographic diversification and scale. However, the transaction remains subject to the completion of due diligence and the green light from the Australian Foreign Investment Review Board. That said, there is no guarantee of a deal taking place. Zephyr, the M&A database published by Bureau van Dijk, shows there have been 126 deals targeting soft drink manufacturers announced globally in 2020 to date. In the largest of these, PepsiCo bought US-based Rockstar for USD 3.85 billion in the most valuable of these. © Zephus Ltd

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