By Andrew Starke
The first casualty of SABMiller’s decision to bid for the Foster’s group is likely to be Pacific Beverages, its joint venture with Coca-Cola Amatil (CCA) in Australia.
Yesterday the two multinationals announced they had agreed to amend the terms and conditions of their Pacific Beverages joint venture.
The existing joint venture arrangements limit SABMiller’s ability to acquire shares in the Foster’s Group in its own right.
SABMiller does not wish to make a joint bid with CCA unless it results in SABMiller having financial management and operation control of Foster’s while, for its part, CCA does not intend to make offers to acquire shares Foster’s in its own right or as a passive minority shareholder.
This impasse has lead to CCA and SABMiller agreeing to amend the terms and conditions of the Pacific Beverages joint venture.
The key material terms of the revised arrangements and the agreement between CCA and SABMiller mean that Pacific Beverages will continue to operate as a 50/50 joint venture pending a formal acquisition announcement.
If SABMiller succeeds in gaining control of Foster’s within five years then it is entitled to acquire CCA’s 50 percent interest in Pacific Beverages.
The payment due to CCA following will depend on the timing of its exercise and will deliver to CCA between $305 million to $380 million.
CCA would then be restrained from selling, distributing or manufacturing beer in Australia for a period of 24 months.
“It will be business as usual at Pacific Beverages,” said group managing director of CCA, Terry Davis.
”However, these amendments are designed to deal with the situation where SABMiller wishes to acquire Foster’s and we don’t.
”If they do we will receive an excellent price for our half share of the Pacific Beverages joint venture and the potential opportunity to supplement our alcoholic beverage strategy by the acquisition of certain of the assets of Foster’s.
CCA previously announced that it had entered into a new 10 year agreement with Beam Global Spirits for the manufacture, sales and distribution of the Beam premium spirits portfolio in Australia, Beam Global’s second largest market in the world.
The new arrangements with Beam Global made CCA responsible for the sales and distribution of the entire Beam Global Spirits and Wine portfolio in Australia in its own right.
This sales and distribution responsibility had previously been carried out on behalf of Pacific Beverages.