Coca-Cola Amtel fails to realise bid's real value: Lion Nathan

Coca-Cola Amatil's rejection of a $4.9 billion bid is rather "brave" in the current economic environment, said Lion Nathan's CEO Rob Murray.

Japanese-controlled Australasian alcoholic beverages company Lion Nathan Ltd, which is also Australia's second-largest brewer, has launched a A$7.6 billion ($4.9 billion) bid for soft drinks group Coca-Cola Amatil, which bottles and distributes several soft drinks of the US cola giant, in addition to its own line of soft drinks and mineral waters. (See: Lion Nathan makes $4.9-billion abortive bid for Coca-Cola Amatil)

Coca-Cola Amatil, at the start of the week, rebuffed Lion Nathan's advances, having failed to secure crucial support from its largest shareholder, the US-based Coca-Cola Company.

Lion Nathan's Murray said the price offered was a ''very attractive premium", and said that it was ''very brave'' of the board and the set of shareholders ''that overlook that in the current environment." He said that the current offer is ''very compelling'' and needs more time to be considered. 

The cash-and-stock bid, which offered a 25 per cent premium to Coca-Cola Amatil's share price, helped boost Coca-Cola Amatil's shares price, though not to the level of the offer.  

The offer is for $6.15 in cash plus 0.469 Lion shares for each Coca-cola Amatil's share. Coca-cola Amatil is a bottling outfit and does not own its brands. Murray said that being a bottler, the goodwill of brands could not be considered ''to any great extent'' when evaluating the value of the business.  

Coca-Cola is the largest shareholder of Coca-Cola Amatil, controlling almost a third of the company. It is reported to be asking for a much higher price, with talks expected to commence sometime during the coming weeks with Japanese brewer Kirin, which owns 46 per cent of Lion Nathan, and is bank-rolling the offer and through a share purchase agreement. 

Nearly a month ago, France's Group Danone had offloaded its Australia and New Zealand bewerages arm Frucor for 14 times its earnings before interest, tax, depreciation and amortisation. That was substantially higher than the 10.3 times Lion Nathan is offering for Coca-Cola Amatil, even though Lion Nathan contends that Frucor is not a fair comparison, being  a small company which owned its brands, unlike Coca-Cola Amatil whose main business is bottling for Coca-Cola.