Brewer Lion Nathan has launched an audacious $7.7 billion bid for soft-drink giant Coca-Cola Amatil in a deal that would result in the creation of an $11 billion beverage giant.
CCA said it received “an incomplete and non-binding” offer from Lion Nathan on 7 November, although it is believed the two companies have been holding merger talks for the last six months.
But the company has refused to back the bid at this stage.
“The CCA board has reviewed its position and believes that there are a number of material deficiencies in the proposal, which is subject to a range of material conditions precedent,” CCA said.
“The CCA board can give no assurance that the proposal will proceed or will be supported by the CCA board or its major supplier, the Coca-Cola Company.”
Lion Nathan, which is 46% owned by Japanese brewing giant Kirin, would be able to extract millions of dollars of cost savings by combining its national distribution network with that of CCA.
The deal would bring together some of Australia’s biggest brands. Lion controls around 42% of the beer market with brands including Tooheys, XXXX, West End and Hahn. CCA, which owns brands including Coca-Cola, Sprite, Fanta and Mount Franklin, has also pushed into the alcohol sector by setting up a joint venture with American beer giant SABMiller, called Pacific Beverages.
CCA also owns the SPC Ardmona food business, which includes brands such as SPC, Goulburn Valley and IXL.
The Lion bid offers CCA shareholders $4.54 billion in cash and 346 million Lion shares, valuing CCA at about $7.66 billion.
Lion Nathan shares are currently in a trading halt, although the company is expected to provide further details about its bid when it announces its full-year results tomorrow.
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