Lion's Bid for CCA Alive and Kicking

By Ian Neubauer

The appointment by Coca-Cola Amatil (CCA) of two prominent finance houses as advisers in its negotiations with Lion Nathan suggest Lion's takeover bid may yet prove successful.

CCA has appointed UBS to aid Macquarie Bank in its negotiations with Lion, The Australian Financial Review reported.

The newspaper said the appointment means CCA and its majority shareholder The Coca-Cola Company (TCCC) “recognise that this situation will ultimately end in a change of control and want to squeeze out the best price”.

But Lion Nathan has made no indication it will consider beefing up what it has described as a generous offer made under volatile market conditions.

Comprising $4.54 billion in cash and 346 million Lion shares, it represents a 22 per cent premium on CCA’s November 7 closing price and a before tax earnings ratio of 11.5. The average earning ratio for successful acquisitions of beverage companies in recent years stands between eight and 10.

Bolstering Lion’s position is TCCC’s move to open lines of communication with Japanese Brewer Kirin Holdings (Lion’s majority shareholder) and an admission by TCCC that it is not ideologically opposed to selling its 30 per cent stake in CCA.

“This is evolving and we are not commenting at this point,” said a spokesman for TCCC, before adding that it would “not hesitate to bring another bottler into our sphere”.

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[Fri 21/11/2008 12:00:40]