Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<ul>
<li>In October 2020, <a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a> (CCL), one of the largest bottlers and distributors of <a href="https://www.smartkarma.com/entities/coca-cola-co-the" target="_blank" data-smartkarma-citation="entities:979:1" rel="noopener">Coca Cola Co (KO US)</a>’s range of products, announced a non-binding indicative proposal from <a href="https://www.smartkarma.com/entities/coca-cola-european-partners" target="_blank" data-smartkarma-citation="entities:29709:1" rel="noopener">Coca-Cola European Partners (CCEP US)</a> (CCEP) to acquire 69.2% of the share capital of CCL (at A$ 12.75 per share in cash, adjusted for 2H20 dividends paid), held by shareholders other than The Coca-Cola Company (KO).</li>
<li>Financial advisors to the deal are Rothschild &amp; Co, Credit Suisse and UBS.</li>
<li>The takeover offer was at a 23% premium to CCL‘s undisturbed one-week volume-weighted price. In our previous notes, we deemed that the offer price was reasonable considering CCL’s somewhat weak fundamentals.</li>
</ul><a href="https://www.smartkarma.com/insights/a-generous-offer-by-coca-cola-european-partners" target="_blank" data-smartkarma-citation="insights:44693" rel="noopener">A Generous Offer By Coca-Cola European Partners</a><a href="https://www.smartkarma.com/insights/growing-investor-opposition-to-ccep-s-take-over-offer-will-there-be-a-bump" target="_blank" data-smartkarma-citation="insights:45143" rel="noopener">Growing Investor Opposition to CCEP's Take Over Offer: Will There Be a Bump?</a><ul>
<li>However, a number of institutional investors pushed back against Coca-Cola European Partners’ takeover offer, suggesting that the takeover offer undervalues the company.</li>
<li>Yesterday, news emerged that Citigroup expects an improved takeover offer for CCL in the next 6-8 weeks.</li>
</ul>


In October 2020, Coca Cola Amatil (CCL AU) (CCL), one of the largest bottlers and distributors of Coca Cola Co (KO US)’s range of products, announced a non-binding indicative proposal from Coca-Cola European Partners (CCEP US) (CCEP) to acquire 69.2% of the share capital of CCL (at A$ 12.75 per share in cash, adjusted for 2H20 dividends paid), held by shareholders other than The Coca-Cola Company (KO).
Financial advisors to the deal are Rothschild &amp; Co, Credit Suisse and UBS.
The takeover offer was at a 23% premium to CCL‘s undisturbed one-week volume-weighted price. In our previous notes, we deemed that the offer price was reasonable considering CCL’s somewhat weak fundamentals.
A Generous Offer By Coca-Cola European PartnersGrowing Investor Opposition to CCEP's Take Over Offer: Will There Be a Bump?
However, a number of institutional investors pushed back against Coca-Cola European Partners’ takeover offer, suggesting that the takeover offer undervalues the company.
Yesterday, news emerged that Citigroup expects an improved takeover offer for CCL in the next 6-8 weeks.


Coca-Cola Amatil Takeover Offer: A Bump Forthcoming?

Earlier this week, <a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a> (CCL), one of the largest bottlers and distributors of <a href="https://www.smartkarma.com/entities/coca-cola-co-the" target="_blank" data-smartkarma-citation="entities:979:1" rel="noopener">Coca Cola Co (KO US)</a>’s range of products, announced a non-binding indicative proposal from <a href="https://www.smartkarma.com/entities/coca-cola-european-partners" target="_blank" data-smartkarma-citation="entities:29709:1" rel="noopener">Coca-Cola European Partners (CCEP US)</a> (CCEP) to acquire 69.2% of the share capital of CCL (at A$ 12.75 per share in cash, adjusted for 2H20 dividends paid), held by shareholders other than The Coca-Cola Company (KO).Upon implementation of the above proposal, CCEP will acquire 10.8% of CCL’s share capital from KO at A$9.75 per share. The remaining 20% will be acquired upon completion at A$10.75 per share.

Earlier this week, Coca Cola Amatil (CCL AU) (CCL), one of the largest bottlers and distributors of Coca Cola Co (KO US)’s range of products, announced a non-binding indicative proposal from Coca-Cola European Partners (CCEP US) (CCEP) to acquire 69.2% of the share capital of CCL (at A$ 12.75 per share in cash, adjusted for 2H20 dividends paid), held by shareholders other than The Coca-Cola Company (KO).Upon implementation of the above proposal, CCEP will acquire 10.8% of CCL’s share capital from KO at A$9.75 per share. The remaining 20% will be acquired upon completion at A$10.75 per share.

A Generous Offer By Coca-Cola European Partners

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<a href="https://www.smartkarma.com/entities/coca-cola-european-partners" target="_blank" data-smartkarma-citation="entities:29709:1" rel="noopener">Coca-Cola European Partners (CCEP US)</a> announced on 25 October that it has made a non-binding proposal to acquire <a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a>.
<ul>
<li>CCL’s independent shareholders would get AUD12.75 per share, in cash.</li>
<li>CCL's shares shot up by 16.3%, while those of CCEP closed 2.7% lower.</li>
</ul>
Although the rationale for a deal is unclear to me, CCEP can afford the acquisition.
CCL was getting its fizz back: CCL shares had fallen by 3% during 2019 to $10.75 (prior to the offer announcement), but are trading above their March low of AUD7.86. I view CCL as a strong company, with a clear strategy; growth opportunities (expanding offer, overseas growth); and growing market share.
However, the current environment is likely to see a structural shift to eating at home and less casual dining at restaurants; a focus on healthier alternatives away from sugary and carbonated drinks; and a resulting decline in restaurant numbers, all of which are dilutive to CCL’s margins.
The offer price represents 22.6x Forward P/E vs. 19.2x for CCEP, thus looking a generous offer. Recommendation is LONG CCL.
<ul>
<li>Gross spread is 1.9% on a deal that is highly likely to succeed.</li>
<li>Average 3m trading volume is 2.8 million shares.</li>
</ul>

Coca-Cola European Partners (CCEP US) announced on 25 October that it has made a non-binding proposal to acquire Coca Cola Amatil (CCL AU).

CCL’s independent shareholders would get AUD12.75 per share, in cash.
CCL's shares shot up by 16.3%, while those of CCEP closed 2.7% lower.

Although the rationale for a deal is unclear to me, CCEP can afford the acquisition.
CCL was getting its fizz back: CCL shares had fallen by 3% during 2019 to $10.75 (prior to the offer announcement), but are trading above their March low of AUD7.86. I view CCL as a strong company, with a clear strategy; growth opportunities (expanding offer, overseas growth); and growing market share.
However, the current environment is likely to see a structural shift to eating at home and less casual dining at restaurants; a focus on healthier alternatives away from sugary and carbonated drinks; and a resulting decline in restaurant numbers, all of which are dilutive to CCL’s margins.
The offer price represents 22.6x Forward P/E vs. 19.2x for CCEP, thus looking a generous offer. Recommendation is LONG CCL.

Gross spread is 1.9% on a deal that is highly likely to succeed.
Average 3m trading volume is 2.8 million shares.


Coca-Cola European Partners - Coca-Cola Amatil: Non-Binding Proposal

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a> is one of the largest bottlers and distributors of ready-to-drink non-alcoholic and alcoholic beverages and coffee in the Asia Pacific region. <a href="https://www.smartkarma.com/entities/coca-cola-european-partners" target="_blank" data-smartkarma-citation="entities:29709:1" rel="noopener">Coca-Cola European Partners (CCEP US)</a>/CCEP  has made a non-binding offer to acquire 69.2% of the issued share capital of Amatil, which is held by shareholders other than <a href="https://www.smartkarma.com/entities/coca-cola-co-the" target="_blank" data-smartkarma-citation="entities:979:1" rel="noopener">Coca Cola Co (KO US)</a>/TCCC i.e. independent shareholders, through a scheme of arrangement. Independent shareholders will receive A$12.75 per share in cash less any final 2H20 dividends paid. The offer price represents a premium of 23% to the 1-week VWAP. TCCC’s 30.8% shareholding in Amatil will be separately acquired in two or more tranches on less favourable terms to independent shareholders. The transaction is targeted for a 1Q20 completion. <div class="content-highlight">Unlike previous takeover offers for Amatil, this proposal comes with TCCC’s backing. The key next step is for CCEP and Amatil to enter into a binding agreement after a short due diligence period. The scheme of arrangement will require Amati shareholder approval. Overall, we believe that the offer price is attractive and anticipate shareholder approval for the scheme. </div>

Coca Cola Amatil (CCL AU) is one of the largest bottlers and distributors of ready-to-drink non-alcoholic and alcoholic beverages and coffee in the Asia Pacific region. Coca-Cola European Partners (CCEP US)/CCEP  has made a non-binding offer to acquire 69.2% of the issued share capital of Amatil, which is held by shareholders other than Coca Cola Co (KO US)/TCCC i.e. independent shareholders, through a scheme of arrangement. Independent shareholders will receive A$12.75 per share in cash less any final 2H20 dividends paid. The offer price represents a premium of 23% to the 1-week VWAP. TCCC’s 30.8% shareholding in Amatil will be separately acquired in two or more tranches on less favourable terms to independent shareholders. The transaction is targeted for a 1Q20 completion. Unlike previous takeover offers for Amatil, this proposal comes with TCCC’s backing. The key next step is for CCEP and Amatil to enter into a binding agreement after a short due diligence period. The scheme of arrangement will require Amati shareholder approval. Overall, we believe that the offer price is attractive and anticipate shareholder approval for the scheme. 

Coca-Cola European Partners’ Takeover Bid for Coca-Cola Amatil

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Australia's largest non-alcoholic beverage bottler <a href="https://www.smartkarma.com/entities/coca-cola-amatil-ltd" target="_blank" data-smartkarma-citation="entities:675:1" rel="noopener">Coca Cola Amatil (CCL AU)</a> has announced an indicative proposal from Coca-Cola European Partners plc (CCEP)  for:
<ul>
<li>the acquisition of all the issued shares held by independent shareholders of CCL by way of a Scheme of Arrangement (for $12.75/shares, cash, less any final 2H20 dividends declared and paid prior to the implementation of any Scheme); and</li>
<li>a separate acquisition of CCL shares held indirectly by <a href="https://www.smartkarma.com/entities/coca-cola-co-the" target="_blank" data-smartkarma-citation="entities:979:1" rel="noopener">Coca Cola Co (KO US)</a> (TCCC) - 30.807% of shares out - which would be on terms less favourable than the terms offered to CCL’s independent shareholders.</li>
</ul>
A$12.75/share is a 25%/38% premium to the one-month/three-month VWAP. The offer backs out a 12.0x/14.3x FY19/FY20E EV/EBITDA, both exceeding the median for peers.
Optically, the offer price is a multi-year high, excluding a handful of days in February this year when shares traded above the indicated terms shortly after the announcement of CCL's FY19 results.
This is a non-binding proposal, subject to due diligence. Australia has a reputation as an indicative proposal graveyard. This should not be the case here - this is a company well known to the bidder.
Currently trading at a 3.4/10.2% gross/annualised spread, assuming around four-months to compete.
This transaction looks decidedly fizzy.
As always, more below the fold.

Australia's largest non-alcoholic beverage bottler Coca Cola Amatil (CCL AU) has announced an indicative proposal from Coca-Cola European Partners plc (CCEP)  for:

the acquisition of all the issued shares held by independent shareholders of CCL by way of a Scheme of Arrangement (for $12.75/shares, cash, less any final 2H20 dividends declared and paid prior to the implementation of any Scheme); and
a separate acquisition of CCL shares held indirectly by Coca Cola Co (KO US) (TCCC) - 30.807% of shares out - which would be on terms less favourable than the terms offered to CCL’s independent shareholders.

A$12.75/share is a 25%/38% premium to the one-month/three-month VWAP. The offer backs out a 12.0x/14.3x FY19/FY20E EV/EBITDA, both exceeding the median for peers.
Optically, the offer price is a multi-year high, excluding a handful of days in February this year when shares traded above the indicated terms shortly after the announcement of CCL's FY19 results.
This is a non-binding proposal, subject to due diligence. Australia has a reputation as an indicative proposal graveyard. This should not be the case here - this is a company well known to the bidder.
Currently trading at a 3.4/10.2% gross/annualised spread, assuming around four-months to compete.
This transaction looks decidedly fizzy.
As always, more below the fold.

United States

The Coca-Cola Company manufactures, markets, and distributes soft drink concentrates and syrups.  The Company also distributes and markets juice and juice-drink products.  Coca-Cola distributes its products to retailers and wholesalers in the United States and internationally.

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Coca Cola Co (KO US)

Coca-Cola Amatil Takeover Offer: A Bump Forthcoming?

In October 2020, CCL announced a non-binding indicative proposal from CCEP to acquire 69.2% of the share capital of CCL held by shareholders other...

Oshadhi Kumarasiri

A Generous Offer By Coca-Cola European Partners

CCL is one of the APAC region’s largest bottlers and distributors of alcoholic and non-alcoholic RTD beverages with operations in Australia, New...

Oshadhi Kumarasiri

Coca-Cola European Partners - Coca-Cola Amatil: Non-Binding Proposal

The offer price represents 22.6x Forward P/E vs. 19.2x for CCEP, thus looking a generous offer. Recommendation is LONG CCL. Gross spread is 1.9% on...

Jesus Rodriguez Aguilar

Coca-Cola European Partners’ Takeover Bid for Coca-Cola Amatil

Coca-Cola European Partners has made a non-binding offer to acquire Amatil at A$12.75 per share in cash less 2H20 dividends paid. Overall, we...

Arun George

Coca Cola Amatil: Flat Or Fizzy?

Coca-Cola European Partners, the world’s largest Coca-Cola bottler by revenue, tables a clean take-private proposal for Coca Cola Amatil.

David Blennerhassett

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