The Coca-Cola Amatil Ltd (ASX: CCL) share price is popping this morning after receiving a takeover offer from Coca Cola European Partners.
Coca Cola Amatil is the Australian listed business that is responsible for Coke products in the Asia-Pacific region.
The takeover offer
Coca Cola Amatil said that it has received a non-binding, indicative proposal from Coca-Cola European Partners plc (CCEP).
CCEP is offering to buy all of the shares of Coca Cola Amatil held by independent shareholders for $12.75 cash per share (less any final second half dividend declared and paid before the takeover).
CCEP will also buy the shares owned by The Coca Cola Company (TCCC), which would be on less favourable terms than the one offered to the independent shareholders.
Due to TCCC’s involvement in the proposed transaction, Coca Cola Amatil’s ‘Related Party Committee’ (RPC) consisting of all the independent non-executive directors (other than nominee directors of TCCC) has considered the proposal.
If satisfactory due diligence is completed, as well as other conditions satisfied (including CCEP and TCCC entering into an agreement for TCCC’s shares), then Coca Cola Amatil’s RPC and managing director Alison Watkins intend to unanimously recommend the takeover as long as there isn’t a better offer and an independent expert concludes the takeover is fair and reasonable.
Trading update
Coca Cola Amatil also provided a third quarter trading update as part of the takeover announcement.
The company said that third quarter volume was down 5.4% on the prior corresponding period. Australia NARTD (non-alcoholic ready to drink) volume was down 2%, Pacific volume was up 1.8% and Indonesia & PNG volume was down 13%.
At the end of the third quarter, the year to date group volume was down 9.7% on the prior corresponding period. However, this was an improvement on the half year volume decline of 11.6%.
Looking at the actual revenue, third quarter revenue was down 4.2% to $1.1 billion. Year to date revenue was down 7.6%, which was better than the decline of 9.2%.
The company said that there has been a continued improvement in New Zealand and Australia as the recovery from COVID-19 gathers pace.
The balance sheet showed that net debt was $1.745 billion, $82 million better than the prior corresponding period. The company said said it has sufficient liquidity to repay all debt maturities over the next year and a half. The interim dividend of 9 cents per share was paid a couple of weeks ago.
Summary
This is an exciting offer for shareholders. Aside from a few days before the COVID-19 crash, the Coca Cola Amatil share price hasn’t been as good as the offer price since 2013. I’d want to sell my shares soon and put it into other ASX dividend shares like Brickworks Limited (ASX: BKW).
