Coca-Cola Amatil seeks a buyer for its Korean operations

Australian drinks company Coca-Cola Amatil said that proceeds from the sale will go towards entering the Australian beer market.

The company confirmed in April that it was considering selling its South Korean business after receiving strong interest from domestic and international players.

A consortium of private equity fund CVC Capital Partners and South Korea’s Woongjin Foods submitted a letter of interest for the business.

Mexico’s FEMSA had submitted a letter of interest but has decided not to pursue the purchase.

Announcing results of a strategic review, Coca-Cola Amatil said it would expand its non-cola soft drinks and speed its entry into the highly profitable Australian beer market.

CCA forecast a high single-digit growth in earnings before interest and tax (EBIT) for 2007. That would be a big improvement on last year’s 1.7 percent EBIT increase, as higher commodity prices pushed costs up.

CCA announced it had drawn several potential suitors for its South Korean arm, which controls 48 percent of the country’s soft drinks market.

Group Managing Director Terry Davis was reported as saying that he wanted to get close to the AUD 700 million (EUR 425 million) in book value for the unit. But before making a definite decision on whether to sell or not he wants to see how close CCA will get to that number. According to reports in the Australian media, it is expected that the Korean operations of CCA will fetch no more than AUD 500 million.

Coca-Cola Amatil said due diligence would be conducted in May and a second round of binding offers was due in June. The board will evaluate bids at its mid-June board meeting.