C-C Amatil Deal

Australian-based soft drink bottler Coca-Cola Amatil (CCA) Ltd announced on Wednesday it had settled the final details of its share swap deal with San Miguel Corp to create the worlds second largest Coca-Cola bottler. CCA announced the deal in April but was forced to look again at its details after some San Miguel shareholders protested that San Miguel would not have enough board-room influence. Reuter and had given away strong cashflows too cheaply.

CCA said on Wednesday the initial terms of the deal had been confirmed, with CCA buying San Miguels stake in a soft drink bottling joint venture in the Philippines in exchange for issuing San Miguel a 25 per cent stake in CCA.

 

CCAs parent group The Coca-Cola Co, which had owned 30 per cent of the joint venture with San Miguel, will have its shareholding in CCA diluted to 33 per cent from 36 per cent.

The A$3.7 billion deal creates a company with annual sales of almost A$4 billion, production of over one billion cases of soft drink and profits of almost A$300 million.

But CCA said the number of San Miguel represenatives on the CCA board would be increased to four from the initially agreed three, helping to allay some San Miguel shareholder concerns.

This development will broaden and deepen the pool of experience and advice available to management and shareholders

as CCA expands its business both in the Philippines and

world-wide, CCA chairman Dean Wills said in a statement.

CCA shareholders welcomed the confirmation of the deal, initially bumping CCAs shares up 62 cents or about four per cent to a new 1997 high of A$16.02 as lingering concerns about a renegotiation were wiped away.

CCA however eased back to A$15.85 near the close after some profit-taking and some analysts comments that the deals confirmation was no surprise.

The deal to all intents and purposes was done. The only fiddling was at the margins, said a Sydney analyst who asked not to be identified. It just means theyre going to have to build a very big board table, the analyst said.

Initial news of the deal in March pulled CCAs share price out of a five month-40 per cent slump brought on by a profit downgrade. It buys them time and strengthens their cash flow, said another Sydney analyst.

Investors in the Philippines were however less impressed.

San Miguels A shares were down a full peso at 49 pesos in late trade as Philippines digested the news that San Miguel would not get a higher proportion of CCA.

It is good news but in terms of bottom line, San Miguel did not get an additional stake, just an additional vote, said Noel Reyes, research head at Anscor-Hagedorn Securities.

The impact is not that positive. They have just given up control of a major cash cow, it is as simple as that, said Helen Alvarez, research director at All Asia Securities.

The deal will be put to put to CCA shareholders within the next month for formal approval.

CCA already operates 43 bottling plants in 17 countries in Australasia, Asia and Eastern Europe and will be second only to its The Coca Cola Co parent as a Coca-Cola producer.

Sydney Newsroom 61-2 9373-1800