By Ian Neubauer
Lion Nathan is aiming to overtake Foster’s Group as the number one beverage company in the Australian and New Zealand marketplace by means of a merger with Coca-Cola Amatil (CCA).
Lion announced today (November 17) it proposed to acquire CCA in exchange for $4.5 billion in cash and 346 million Lion shares, implying a total acquisition price of about $8 billion.
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.
The potential merger would also create a ballast against the Coles-Woolworths retail duopoly, which has a track record of using its weight to demand ever-increasing rebates and discounts from suppliers.
Lion said it intends to maintain separate alcoholic and non-alcoholic beverage businesses should the deal go through, and would seek to retain CCA’s key operational management.
It is proposing the current chairman and CEO of Lion Nathan lead the combined group and that two of CCA’s non-executive directors be offered non-executive board seats.
The merger will require the approval of a wide range of regulatory authorities, including the Australian Competition and Consumer Commission (ACCC) and its New Zealand equivalent, the NZCC.
In 1998, the ACCC foiled a $1.85 billion offer by CCA to acquire the domestic beverage arm of Cadbury-Schweppes, saying the deal would have an adverse effect on the marketplace.
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