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Coca-Cola European Partners targets controlling stake in Asia-Pacific counterpart to double consumer

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Coca-Cola European Partners PLC (LON:CCEP) said it has made a non-binding proposal to acquire a majority stake in Coca-Cola Amatil Limited (ASX:CCL), one of the largest beverage bottling and distribution firms in the Asia-Pacific region, in a deal that it says will almost double its consumer reach.

The company said under the proposed deal, CCL’s independent shareholders, which control around 69.2% of the firm, will receive A$12.75 (697p) per share, an 18.6% premium on its last close price. Meanwhile, The Coca-Cola Company (NYSE:KO), which owns the remaining 30.8% of CCL, will receive A$9.57 (523p) per share for part of its holding amounting to 10.8% of CCL’s total share capital. CCEP also said it will work with Coca-Cola to acquire the remaining 20% of its holding in CCL, conditional upon Australian regulatory approvals and the implementation of the scheme of arrangement.

Overall, the proposal values CCL at around A$8.7bn (£4.76bn), with CCEP saying the transaction will create a “broader and more balanced footprint” for the company with the aim of “ultimately driving sustainable and faster growth, through geographic diversification and scale”.

In a separate announcement which included a trading update for the firm’s third quarter, chief executive Damian Gammell said the proposal was “a unique and tremendous opportunity to combine two of the world’s best bottlers”.

“This larger platform would enable us to scale up even faster than before and solidify our position as the largest Coca-Cola bottler by revenue, further strengthening our strategic partnership with The Coca-Cola Company”, the CEO added.

Dividend declared following resilient performance

In the figures for the three months ended September 25, CCEP reported revenues of €3.1bn, down 3% year-on-year, on volumes which declined 4% to 665mln cases due to the impact of the coronavirus pandemic across its markets.

Despite the small decline, the company said the results demonstrated “the resilience of our business and our ability to operate with agility in such a rapidly changing environment” and declared a full year dividend of €0.85 (77p) per share

“Our performance over the summer months was encouraging. Volumes significantly improved compared to the second-quarter of the year, mirroring outlet re-openings in the away from home channel, solid demand in the home channel, where we continued to take share, as well as favourable weather across most markets. While the reintroduction of restrictions and local lockdowns has resulted in continued uncertainty about the duration and impact of the pandemic, we continue to believe that the second quarter will be the most impacted”, Gammell said.

Shares in CCEP were 5.8% higher at €34.39 in mid-morning trading on Monday.

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