Soft drink maker Coca-Cola Amatil (CCA) has a high expectation of acquiring the spirits, ready-to-drink mixed spirits and non-alcoholic brands of brewer Foster’s Group.
In September, the Foster’s board recommended that shareholders accept an improved $10.7 billion takeover offer from international beverage giant SABMiller.
CCA has agreed with SABMiller that, should SABMiller succeed in the takeover of Foster’s, CCA will have the opportunity to acquire all of the Foster’s spirits, ready-to-drink mixed spirits and non-alcoholic brands, the Fiji brewery and a distillery.
CCA managing director Terry Davis said on Wednesday that it was too early to say if CCA would definitely buy the assets.
“First of all, it (the sale of Foster’s to SABMiller) has to be approved by Foster’s shareholders,” he told reporters after addressing an American Chamber of Commerce in Australia luncheon.
“And then the second component of that is we get access to due diligence.
“We’ll make the decision after that, but assuming that that due diligence is fine and there’s no reason why it wouldn’t be, we’d have a fairly high expectation that we would (buy the assets).”
Asked how much CCA might pay for the assets, Mr Davis said that the price would be set by a formula that was driven by an earnings multiple that was lower than the earnings multiple that SABMiller was paying for Foster’s.
Mr Davis said CCA already had a strong alcoholic mixed-drink business, with Jim Beam and Cola, and a strong distribution platform that would enable it to drive improvement in the Foster’s non-beer assets.
“We’ve got the most effective sales force in the country. We call on every licensed premise in Australia,” he said.
“We think that we have very strong customer relationships, so we hope to leverage all of those.”
Mr Davis said there had been suggestions that the Foster’s assets of interest to CCA could be worth around $200 million.
But an accurate figure would only be determined when CCA gains access to the Foster’s accounts during the due diligence process.
CCA currently owns half of Pacific Beverages, which makes the Bluetongue brand of beers, in a joint venture with SABMiller.
SABMiller and CCA will end the joint venture, with SABMiller buying CCA out to own both Foster’s and Pacific Beverages.
Under a non-compete provision, CCA will be restrained from selling, distributing or manufacturing beer in Australia for two years.
Mr Davis said CCA’s re-entry into the beer market in Australia was a long way off.
“But what we do know is that international brewers will be looking for alternative forms of distribution, and we think that we offer that alternative form of distribution.”
Mr Davis said, however, that the non-compete clause did not prevent CCA from doing anything in New Zealand.
Mr Davis said distribution of brands would be the first step in re-entering the beer market, but the eventual aim would be to make the product locally.
