Coca-Cola European Partners makes play for Coca-Cola Amatil
CCEP – which is the largest Coca-Cola bottler by revenue with markets centred in Western Europe – says the proposed acquisition would create a broader and more balanced footprint for CCEP while almost doubling its consumer reach.
While Australia and New Zealand are Amatil's biggest markets by far, it also eyes up the opportunity to take on what is set to be one of the world’s most populous markets, Indonesia.
Damian Gammell, CEO, CCEP, said: “This is a unique and tremendous opportunity to combine two of the world's best bottlers, creating a broader and more balanced geographic footprint, including one of the most attractive and populous emerging markets, doubling our consumer reach to 600 million. This larger platform would enable us to scale up even faster than before and solidify our position as the largest Coca-Cola bottler by revenue, further strengthening our strategic partnership with The Coca-Cola Company.”
The proposed AUD $9.28bn ($6.6bn) acquisition would grow CCEP’s revenues by 25% from €12bn ($14.2bn) to more than €15bn ($17.7bn).
CCEP has made an offer to acquire 69.2% of the existing share capital of Coca-Cola Amatil held by independent shareholders; while setting out a proposal with The Coca-Cola Company to acquire TCCC’s 30.8% interest in Amatil (19.5% of CCEP is owned by TCCC).
Any transaction will be dependent on Australian regulatory approvals.
Geographical expansion
Coca-Cola European Partners was created four years ago - merging three European bottlers - and now covers 13 markets. Germany, Great Britain and France are its largest markets, while it also serves Belgium, Luxembourg, Spain, Sweden, Norway, the Netherlands, Iceland, Bulgaria and Portugal. It has 23,300 employees and 47 manufacturing sites across Europe.
“Four years on from the creation of CCEP, this is the right time to take on a new growth opportunity”, says Gammell. “Western Europe of course remains a fantastic place to be, however, it is now the right time to take our proven playbook and apply its success to these new markets.”
Coca-Cola Amatil is the Coca-Cola bottler covering Australia, New Zealand, Fiji, Indonesia, Papua New Guinea and Samoa. It directly employs around 12,000 people. Its FY19 revenue was AUD $5.1bn ($3.6bn), with around three-quarters of that coming from its largest markets of Australia and New Zealand.
“We would be diversifying into a very exciting part of the world. New geographic exposure into markets which, while largely developed in nature and therefore like our own, enjoy higher underlying growth fundamentals," continued Gammell.
“Of course, we’re very mindful of the backdrop: both businesses have excellent agile teams and operating models with great digital capability which will allow us to continue to run the collective business effectively in COVID times, while building on the best of who we are as we emerge from the pandemic and into an exciting future together.
“Admittedly in the context of a global pandemic, the timing could have been easier, but the pandemic has been less disruptive in Australia and New Zealand than in Europe, so we are confident that the short-term impacts and underlying fundamentals do not materially impact any long-term view.”
While Australia and New Zealand may account for the lion's share of revenue, CCEP notes the potential of Indonesia in the coming years (the UN predicts that Indonesia will have become the fifth most populous country in the world by 2050).
“Indonesia’s growth prospects are particularly attractive so we are excited that this transaction provides exposure to one of the most populous and dynamic emerging markets,” adds Gammell.
