European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<a href="https://www.smartkarma.com/entities/coca-cola-european-partners" target="_blank" data-smartkarma-citation="entities:29709:1" rel="noopener">Coca-Cola European Partners (CCEP US)</a> announced on 25 October that it has made a non-binding proposal to acquire <a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a>.
<ul>
<li>CCL’s independent shareholders would get AUD12.75 per share, in cash.</li>
<li>CCL's shares shot up by 16.3%, while those of CCEP closed 2.7% lower.</li>
</ul>
Although the rationale for a deal is unclear to me, CCEP can afford the acquisition.
CCL was getting its fizz back: CCL shares had fallen by 3% during 2019 to $10.75 (prior to the offer announcement), but are trading above their March low of AUD7.86. I view CCL as a strong company, with a clear strategy; growth opportunities (expanding offer, overseas growth); and growing market share.
However, the current environment is likely to see a structural shift to eating at home and less casual dining at restaurants; a focus on healthier alternatives away from sugary and carbonated drinks; and a resulting decline in restaurant numbers, all of which are dilutive to CCL’s margins.
The offer price represents 22.6x Forward P/E vs. 19.2x for CCEP, thus looking a generous offer. Recommendation is LONG CCL.
<ul>
<li>Gross spread is 1.9% on a deal that is highly likely to succeed.</li>
<li>Average 3m trading volume is 2.8 million shares.</li>
</ul>

Coca-Cola European Partners (CCEP US) announced on 25 October that it has made a non-binding proposal to acquire Coca Cola Amatil (CCL AU).

CCL’s independent shareholders would get AUD12.75 per share, in cash.
CCL's shares shot up by 16.3%, while those of CCEP closed 2.7% lower.

Although the rationale for a deal is unclear to me, CCEP can afford the acquisition.
CCL was getting its fizz back: CCL shares had fallen by 3% during 2019 to $10.75 (prior to the offer announcement), but are trading above their March low of AUD7.86. I view CCL as a strong company, with a clear strategy; growth opportunities (expanding offer, overseas growth); and growing market share.
However, the current environment is likely to see a structural shift to eating at home and less casual dining at restaurants; a focus on healthier alternatives away from sugary and carbonated drinks; and a resulting decline in restaurant numbers, all of which are dilutive to CCL’s margins.
The offer price represents 22.6x Forward P/E vs. 19.2x for CCEP, thus looking a generous offer. Recommendation is LONG CCL.

Gross spread is 1.9% on a deal that is highly likely to succeed.
Average 3m trading volume is 2.8 million shares.


Coca-Cola European Partners - Coca-Cola Amatil: Non-Binding Proposal

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a> is one of the largest bottlers and distributors of ready-to-drink non-alcoholic and alcoholic beverages and coffee in the Asia Pacific region. <a href="https://www.smartkarma.com/entities/coca-cola-european-partners" target="_blank" data-smartkarma-citation="entities:29709:1" rel="noopener">Coca-Cola European Partners (CCEP US)</a>/CCEP  has made a non-binding offer to acquire 69.2% of the issued share capital of Amatil, which is held by shareholders other than <a href="https://www.smartkarma.com/entities/coca-cola-co-the" target="_blank" data-smartkarma-citation="entities:979:1" rel="noopener">Coca Cola Co (KO US)</a>/TCCC i.e. independent shareholders, through a scheme of arrangement. Independent shareholders will receive A$12.75 per share in cash less any final 2H20 dividends paid. The offer price represents a premium of 23% to the 1-week VWAP. TCCC’s 30.8% shareholding in Amatil will be separately acquired in two or more tranches on less favourable terms to independent shareholders. The transaction is targeted for a 1Q20 completion. <div class="content-highlight">Unlike previous takeover offers for Amatil, this proposal comes with TCCC’s backing. The key next step is for CCEP and Amatil to enter into a binding agreement after a short due diligence period. The scheme of arrangement will require Amati shareholder approval. Overall, we believe that the offer price is attractive and anticipate shareholder approval for the scheme. </div>

Coca Cola Amatil (CCL AU) is one of the largest bottlers and distributors of ready-to-drink non-alcoholic and alcoholic beverages and coffee in the Asia Pacific region. Coca-Cola European Partners (CCEP US)/CCEP  has made a non-binding offer to acquire 69.2% of the issued share capital of Amatil, which is held by shareholders other than Coca Cola Co (KO US)/TCCC i.e. independent shareholders, through a scheme of arrangement. Independent shareholders will receive A$12.75 per share in cash less any final 2H20 dividends paid. The offer price represents a premium of 23% to the 1-week VWAP. TCCC’s 30.8% shareholding in Amatil will be separately acquired in two or more tranches on less favourable terms to independent shareholders. The transaction is targeted for a 1Q20 completion. Unlike previous takeover offers for Amatil, this proposal comes with TCCC’s backing. The key next step is for CCEP and Amatil to enter into a binding agreement after a short due diligence period. The scheme of arrangement will require Amati shareholder approval. Overall, we believe that the offer price is attractive and anticipate shareholder approval for the scheme. 

Coca-Cola European Partners’ Takeover Bid for Coca-Cola Amatil

United Kingdom

Coca-Cola Europacific Partners (CCEP) is a leading consumer goods company and the world's largest independent bottler of Coca-Cola products. The company manufactures, distributes, and sells a diverse portfolio of non-alcoholic ready-to-drink beverages, including popular brands like Coca-Cola, Fanta, Sprite, and Monster Energy. CCEP was formed in 2016 through the merger of three major European bottlers, and expanded in 2021 with the acquisition of Coca-Cola Amatil. Its headquarters are in Uxbridge, England, and the company was founded on May 28, 2016, as Coca-Cola European Partners, rebranding as Coca-Cola Europacific Partners in 2021.

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Coca-Cola Europacific Partners (CCEP US)

Coca-Cola European Partners - Coca-Cola Amatil: Non-Binding Proposal

The offer price represents 22.6x Forward P/E vs. 19.2x for CCEP, thus looking a generous offer. Recommendation is LONG CCL. Gross spread is 1.9% on...

Jesus Rodriguez Aguilar

Coca-Cola European Partners’ Takeover Bid for Coca-Cola Amatil

Coca-Cola European Partners has made a non-binding offer to acquire Amatil at A$12.75 per share in cash less 2H20 dividends paid. Overall, we...

Arun George

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