Coca-Cola Amatil: Cheers
About the author:
- Author name:
- By Belinda Moore
- Job title:
- Senior Analyst
- Date posted:
- 14 March 2021, 11:15 AM
- Sectors Covered:
- Agriculture, Food & Beverage, Travel
- The Independent Expert’s report by Grant Samuel & Associates Pty, has concluded that the scheme is fair and reasonable and accordingly is in the best interests of independent shareholders.
- The Independent Expert has assessed the underlying value of Coca-Cola Amatil (ASX:CCL) at between A$12.68-14.01 per share. This valuation includes a premium for control. It is in line with CCEP’s offer price of A$13.50 per share.
- We maintain a Hold rating. Our price target (login to view) is in line with the offer price. The next key event is the scheme meeting on 16 April.
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Details of CCEP’s offer price
As has been previously announced, Coca-Cola European Partners plc (CCEP) has declared its offer price for CCL of A$13.50 per share as its best and final, meaning it won’t increase its offer price again.
Remember the offer price is less the final dividend of 18cps fully franked. The ex-dividend date is 16 April, record date is 19 April and it will be paid on 30 April.
Therefore, if the scheme is approved, independent CCL shareholders will be sent the cash amount of A$13.32 on the implementation date (expected to be 10 May 2021).
Gets the Independent Expert’s tick of approval
The Independent Expert’s report by Grant Samuel & Associates Pty, has concluded that the scheme is fair and reasonable and accordingly is in the best interests of independent shareholders.
The Independent Expert has assessed the underlying value of CCL at between A$12.68-14.01 per share. This valuation includes a premium for control.
It compares to our valuation of CCL of A$11.43 per share which includes no premium for control. The valuation range is wider than it might normally be due to COVID-19 uncertainty.
Grant Samuel noted that the offer price equates to an acquisition multiple that generally compares favourably to comparable developed market Coca-Cola bottler transactions and comparable listed Coca-Cola bottler trading multiples.
Get ready to vote
CCL’s related party committee and Group Managing Director unanimously recommend that independent shareholders vote in favour of the Scheme. The scheme meeting is expected to be held on 16 April.
CCEP requires at least 75% of independent CCL shareholders to vote in favour of the offer. The Coca-Cola Company (TCCC) which owns 30.8% of CCL can’t vote.
Remember that CCEP has entered into a separate agreement (lower offer price) with TCCC. CCEP has received FIRB approval however it continues to wait for OIO approval in New Zealand.
Investment view – Hold recommendation and moved price target
In line with CCEP’s offer price, we move our price target from A$12.75 previously (login to view). We maintain a Hold recommendation.
The key risk to our view is not receiving the necessary regulatory and shareholder approvals in regards to CCEP’s takeover offer. However with volumes recovering as COVID-19 restrictions ease and A$145m of cost savings targeted by FY22, we think CCL is well placed in the future.
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