ASX-listed drinks giant Coca-Cola Amatil might be sold to the European arm of Coca-Cola under a shock $10.87 billion deal that would see the entire Amatil business sold.
Under the proposed deal, unveiled in detail by Coca-Cola Amatil this morning, Amatil shareholders would receive $12.75 cash per share, which equates to a 23 per cent premium to the one week volume weighted average price of its shares.
The European arm of Coca-Cola has lobbed a $10.87 billlion play for Coca-Cola Amatil.Credit:Louie Douvis
Coca-Cola Amatil shares last traded on Thursday at $10.75 before the company requested a trading halt early on Friday morning, pending an announcement about a "material" transaction.
No details were made available on the day, but instead speculation centred on the possibility that the announcement was tied to Amatil's potential interest in buying a number of drink labels from Japanese brewer Asahi.
The enterprise value of the offer from Coca-Cola European Partners for Amatil, including debt is $10.87 billion. The implied equity value of the proposed $12.75 per share cash offer is $9.28 billion.
The deal to buy the Amatil shares would be via a scheme of arrangement. Coca-Cola Amatil's independent directors intend to unanimously recommend the proposed scheme of arrangement, subject to a range of conditions.
To acquire Amatil in full, the European arm would also have to acquire the stake in Amatil held by the international drinks giant The Coca-Cola Company (TCCC), based in Atlanta.
Documents released this morning suggests TCCC supports the deal. Amatil released a letter this morning indicating that on October 25 the US parent and the European arm of Coca-Cola entered into a “co-operation letter” in respect of the proposed deal.
TCCC currently owns about 30.8 per cent of Amatil’s shares, and as a result of the co-operation letter the US drinks giant and the European arm have become associates in respect of Coca-Cola Amatil. This means that the European arm of Coca-Cola now has 30.8 per cent voting power in relation to Amatil’s shares.