Coca-Cola Amatil: Cheers

About the author:

Belinda Moore
Author name:
By Belinda Moore
Job title:
Senior Analyst
Date posted:
14 March 2021, 11:15 AM
Sectors Covered:
Agriculture, Food & Beverage, Travel and Chemicals

  • 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.

Find out more

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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