C-C Amatil makes deal with San Miguel

C-C Amatil makes deal with San Miguel

SYDNEY (Reuter): Australian beverage group Coca-Cola Amatil transformed itself yesterday into the largest Coca-Cola bottler outside the United States by unveiling an A$3.4 billion (US$2.6 billion) deal with San Miguel Corp of the Philippines.

Under the surprise agreement, which pleased local traders and investors, C-C Amatil would issue 293 million shares to acquire San Miguel soft drink subsidiary Coca Cola Bottler Philippines Inc (CCBPI), which is owned 70 percent by San Miguel and 30 percent by The Cola Cola Co.

CCBPI owns and operates 21 soft drinks plants in the Philippines and has 75 percent of the market.

San Miguel would end up with a 25 percent stake in C-C Amatil, while The Coca Cola Co would see its shareholding in the Australian group diluted from about 36 percent to 33 percent.

C-C Amatil chairman Dean Wills said the Philippines deal would add immediately to the company's earnings and growth prospects, strengthen its balance sheet and improve earnings per share. Investors have been disappointed on most counts over the last few months.

"It really does mark a new era in C-C Amatil's development," Wills told reporters.

The Australian bottler, which already operates in 17 countries in Asia-Pacific and Europe, has long vied with Mexico's Panamerican Beverages (Panamco) for the status of largest Coca- Cola bottler outside of the United States.

The biggest Coca-Cola bottler is Coca Cola Enterprises Inc, which operates in the U.S. and Europe.

Wills described the deal as "a sea change in the affairs of the company" and also forecast a first half net profit in line with the A$59 million recorded in the previous first half and an improved result for calendar 1997.

The sharemarket reacted positively, marking up C-C Amatil's share price which has improved in recent weeks from a low of A$11.15, its lowest price in 14 months.

C-C Amatil shares closed up 75 cents at A$12.70. Analysts said the deal appeared sound in terms of strategic positioning in Asia, and C-C Amatil's balance sheet.

C-C Amatil was increasing the number of shares on issue by about a half, but doubling its profits, said one analyst, who declined to be named.

"It's an obviously positive transaction for them...and it's just a huge vote of confidence by San Miguel," the analyst said.

San Miguel chairman and chief executive officer Andres Soriano said in a statement that the move would allow San Miguel, the Philippines' largest beverage, food and packaging company, to expand the horizon of its soft drinks business.

Wills said C-C Amatil would gain access to a market which has had a "Coca Cola culture" for more than 70 years, but which still had strong growth prospects.

Per capita consumption of Coca-Cola products in the Philippines was about 115 servings a year, compared with about eight in Indonesia and 320 in Australia.