CC-Amatil on track for record profits

In November 2008, Lion Nathan, Australia’s number two brewer, had approached CCA with an AUD 7.6 billion takeover offer. CCA’s board rejected the offer on the grounds that it was too low. This has convinced Australian commentators that the Coca-Cola Company, which owns over 30 percent of its Australian offshoot, has vetoed the deal.

For The Coca-Cola Company the takeover of CCA is not just about money – above all it is about strategy and fundamentally so. The Coca-Cola Company has to consider whether it should align its famous name so heavily with the production and marketing of alcoholic beverages.

Of course, the U.S. group is not completely teetotal. CCA set up a beer joint venture in Australia with the international brewing giant, SABMiller, in 2006. In December 2007 the joint venture bought a boutique brewery, Bluetongue, and it is now constructing an AUD 100 million brewery near Sydney to open in 2010.

But the Australian joint venture between CCA and SABMiller is just a niche player – a far weaker corporate mixed-drink than the one Lion Nathan has proposed, even though it says Lion Nathan’s and CCA’s operations would be run separately.

Issue number two for The Coca-Cola Company to consider is whether it wants to strike up a major de-facto partnership with Japan’s Kirin brewing group, which owns 46 percent of Lion Nathan, and is part-funding the merger proposal.

Under the proposal, Kirin would buy AUD 3.76 billion worth of new shares in Lion Nathan via a placement to provide 83 percent of the AUD 4.5 billion cash component of the AUD 7.6 billion deal, in doing so maintaining its influence, by emerging with 47.5 percent of the combined business.

Small wonder that Rob Murray reiterated in November 2008 that support from The Coca-Cola Company for the success of the merger was vital and that Lion Nathan was continuing talks with them. There was no suggestion of a hostile situation arising. There are no further news at time of going to press.

Caption (below): Lion Nathan’s CEO Rob Murray needs the support of The Coca-Cola Company in Atlanta in order to bottle the deal with CCA. Photo: Lion Nathan