By Ian Neubauer
Speaking to the Group 100 conference of senior finance executives at the Westin in Sydney yesterday (November 26), Davis questioned Lion’s ability to up the ante and if it could realise cost synergies outlined in its proposal.
Lion said the deal would potentially save the combined companies at least $100 million per year in duplicated distribution costs and create growth opportunities that are currently evading both suppliers.
But Davis remains unconvinced: “In the case of the Lion Nathan proposal… the question of price, and in particular their ability to be able to fund a much higher bid and execution capability, will be important, particularly when there are six stakeholders in the decision process,” he said.
Davis likened Lion’s proposal to BHP’s failed bid to acquire UK mining rival Rio Tinto, which fell apart on Tuesday (November 25) following 10 months of intensive haggling.
“Sadly over the last two or three years, we’ve seen many shortfalls in this regard and you’ve only got to look at the announcement today about Rio and BHP.”
Lion announced its $8 billion cash and share offer for CCA with much fanfare last Monday (November 17) in a failed attempt to reinvigorate stalled merger talks that reportedly began six months ago.
But both CCA and its majority shareholder — The Coca-Cola Company (TCCC) of Atlanta — quickly rejected the bid, citing material deficiencies and describing the offer as unattractive.
Lion said it will persevere but refuses to sweeten the deal. It said the offer that represents a 30 per cent premium on CCA’s share price is more than generous under current economic conditions.
“Markets have fallen 15 per cent since our offer was tabled and that makes it all the more attractive,” The Australian Financial Review reported a source close to Lion saying.
“While we have a fully funded offer of $ billion and we’re committed to continuing engagement with CCA and TCCC to unlock the compelling value on the table, the BHP-Rio situation demonstrates no proposal is a free option forever.”