Coca-Cola Amatil after Schweppes, Foster’s?
Rumours are circulating that beverage company Coca-Cola Amatil (CCA) is looking to make a major purchase, with Schweppes or Foster’s likely to be their target.
The rumours have been gathering strength since CCA’s CEO, Terry Davis, told reporters that it would make sense for them to look into a potential purchase of Schweppes, following their AGM last week.
This is not the first time CCA have outlined their interest in Schweppes, with a $1.85 billion acquisition of the company blocked by the Australian Competition and Consumer Commission just under a decade ago. Any bid would be expected to be markedly higher than the $1.85 billion figure, with Schweppes valuing the share capital of its operations at about $2.84 billion earlier this year.
Following the recent demerger of Cadbury-Schweppes in North America, Australia is the only country where Cadbury still maintains a drinks operation. Consequently, it would be no surprise for Cadbury to strongly consider any bid from CCA; regulatory approval, on the other hand, may prove harder to come by.
Coca-Cola Amatil believe “the landscape for beverages has changed dramatically in the last ten years”, implying that they think the ACCC would strongly consider allowing a takeover.
The comments by Mr Davis are believed by some to be a diversion for a much larger bid, with Foster’s apparently also on their radar. A Foster’s bid would make sense for Coca-Cola Amatil seen as a number of purchases over the past couple of years has seen them expand their alcoholic beverage division. It appears that investors also believe that Foster’s would be a suitable target with the company’s shares rising five per cent soon after the comments by Mr Davis.
The obvious issue is that the market capitalisation of CCA is about $4 billion below that of Foster’s meaning they will need assistance from another investor in order to make a bid. There has been reports that Macquarie Group are involved but CCA are yet to confirm this rumour.
Either way, a shake-up of the Australian beverage industry appears to be on the cards, whether it’s primarily in the soft-drink or alcoholic beverages section remains to be seen.
