Bid for CC-Amatil compelling: Lion Nathan

Font Size

Print

Feedback

Email

Discuss

Related Articles

Lehman deal on PE close: SourceDaiichi Sankyo loses $3.9 bn on RanbaxyDaiichi Sankyo loses $3.9 bn on Ranbaxy'Nokia CEO to favour profit over sales targets'

Melbourne, November 18: : Lion Nathan, Australia's second-largest brewer, stood firm on its rebuffed A$7.6 billion ($4.9 billion) bid for soft drinks group Coca-Cola Amatil, as it reported a flat second-half profit.

In his first public comments on the offer, Lion Nathan Chief Executive Rob Murray said the roughly 30 per cent premium offered in the proposal was compelling, especially in the face of an economic downturn and a volatile share market.

"It's a very brave set of shareholders that would overlook that in the current environment," Murray said at the group's results briefing.

Lion Nathan and its 46 per cent owner, Kirin Brewery, declined to comment on whether they would increase the offer to satisfy Coca-Cola Amatil's 30 per cent owner, Coca-Cola.

Coca-Cola Amatil said on Monday that the bid had material weaknesses and looked cheap compared with other recent deals.

Murray highlighted that the valuation on Lion Nathan's offer exceeded the top valued takeover of a bottler in the past seven years, Coca Cola Enterprises' purchase of Herb Coca-Cola in 2001.

Lion Nathan's shares fell 3 per cent to A$8.38 in line with the broader market, which it has heavily outperformed so far this year.

Coca-Cola Amatil's shares fell 2 per cent to A$9.12, trading 10 per cent below the implied value of the proposed cash and scrip offer, reflecting investor doubts the deal will go ahead.

"It really depends on your 30 per cent shareholder," said Mark Daniels, equities director at Aberdeen Asset Management, which owns Lion Nathan shares.

The Coca-Cola Co sent a letter to Kirin about the deal, but Kirin and Lion Nathan declined to comment on what the Atlanta-based drinks giant wanted to discuss with Kirin.

"Our stance has not changed, we will continue to explain that Lion Nathan's proposal is attractive," said Kirin spokesman Hiroki Umezawa.

FORECASTS

Lion Nathan, which brews Tooheys, XXXX and Hahn beers, reported a net operating profit before one-offs for the six months to September of A$110.6 million against A$110.4 million a year earlier, slightly ahead of analysts' forecasts for around A$107.9 million, according to Reuters calculations.

It raised the bottom end of its forecast for 2009, as the Boag's premium beer business outperformed. It now expects a net profit between A$300 million and A$315 million in the year ahead.

"The result's pretty good," said Daniels, adding that the stock was probably down because it was expensive relative to the market.