It has been sold in Australia for decades with help from local celebrities and even become part of Sydney's cityscape. But now Coca-Cola is set to lose its local flavour.
Key points:
- Investors will vote today on whether to sell Australian company Coca-Cola Amatil to Europe
- Europe is offering $9.8 billion
- CCA controls the rights to the famous brand Coca-Cola in Australia and has many factories here to make it
Shareholders have overwhelmingly voted to sell Australian bottler Coca-Cola Amatil (CCA) to Coke's European offshoot for $9.8 billion.
Investment analyst Paul Rickard, who owns shares in CCA, was one of those who voted in favour of the deal on Friday morning.
"Of course I'd prefer the company to stay in Australian hands but I'm sure we'll have some opportunities in the European market," he said.
While its namesake has Coca-Cola in it, the Australian company that is being sold off actually started out more than a century ago by selling cigarettes.
It started buying up local franchise rights to the iconic American brand Coca-Cola in the 1960s and now controls the brand’s production and distribution for all of Australia.
Supplied: CCA
)It makes the brown fizzy drink at factories across the country and bottles it for sale for outlets from supermarkets through to cinemas.
It also has the rights to Coca-Cola in several nearby markets, including Indonesia, Fiji, PNG and New Zealand.
As well as its namesake brand, CCA has the rights to a horde of other drinks from Fanta and spring water through to hard liquor like Jim Beam.
ABC News: Alistair Kroie
)Over the years, as it has battled to diversify from its sugar-laden roots, CCA has also has bought stakes in other local companies such as Made Group, which makes coconut water and yogurt.
One of its more unpopular decisions was buying up Australian canned fruit company SPC in 2005. It pumped $250 million into it over 14 years and then sold if off for just $15 million profit.
Sale will see another Australian company go offshore
CCA floated on the ASX in the 1970s and was once a top 10 company.
But its share price has suffered over the years as it battled the rise of small challenger brands, the anti-sugar movement and subdued sales of the core fizzy drink.
Almost a third of CCA is owned by the US Coca-Cola parent company, giving it a controlling stake. The rest is owned by a range of shareholders on the ASX.
Two years ago, another global franchisee of Coca-Cola started circling: Coca-Cola European Partners (CCEP).
After its low-ball offers were initially knocked back, in late 2020 the European company made a $9.3 billion offer to investors that worked out to $12.75 a share.
In a sign that investors supported the sale, its share price has been surging since the takeover offer and is now at $13.46.
CCEP upped its offer in February to $13.50 a share, increasing the total bid to $9.8 billion. This is the offer that has now been accepted by shareholders at the Friday vote.
"I bought my shares in Coca-Cola a long time ago for $8. They haven't done much in a long time," retail investor Paul Rickard said.
"I welcome the sale because it finally allows shareholders to realise some value in the company.
"It's been a tough time for Coca-Cola because the fizzy drinks market hasn't been as buoyant."
The deal was recommended by the CCA board. It was also crucially supported by Coca-Cola's head company in the US, which had a large hand in brokering the deal.
At the vote, one investor accused CCA's board of "acting for overseas interests, not Australian shareholders" in supporting the deal, while another said the offer fell short of the company's true value.
The sell-off has also been approved by the Foreign Investment Review Board.
That approval was needed because the sale would put a significant Australian company into the hands of an overseas company.
ABC News
)Investment banker and grocery brand specialist David Williams said the looming sell-off to Europe was part of a broader trend towards the re-globalisation of major brands.
“These things go in cycles,” he said.
“What you've seen the last 10 years is foreign corporations based in Australia are starting investing in business development and specifically in Australian brands that aren’t international brands.
“The large multinationals are having a shift in sentiment where they’re looking at the brands with a large international footprint."
Supplied: CCA
)Given that CCA controls some Australian-only brands such as Made Group's portfolio, it will be interesting to see what CCEP could do with those assets after a takeover.
Mr Rickard said he did not expect CCEP to start selling off chunks of the business immediately, but that it may look to what other Australian brands it can buy.
He also thinks CCEP will review the company's operations in Indonesia, where Coca-Cola is still battling to catch up to its historical rival Pepsi.
Coke fans shouldn't notice much change
For the many Coca-Cola fanatics in Australia, it will likely not mean any change in the availability of the core brand, but may reduce local marketing.
Supplied: Coca-Cola Memorabilia Collectors Club of SA
)Shane Waycott from the Coca-Cola Memorabilia Collectors Club of Australia hopes that they can still have a good local relationship with the European company to organise locally approved events.
In his years building up a 5,000-piece memorabilia collection, Mr Waycott has been involved in making local spin-offs like a Coca-Cola themed yo-yo.
"From a collector's point of view, when we design and do anything as a club we get support from the company," he said.
"If we want to design something, we send it over to Sydney, and get their tick off to say they're happy with that.
"If we don’t have that local contact anymore it could make it harder in the future."
Former Coca-Cola Amatil worker Robert Price and current shareholder said the sale was just part of "evolution" and the ongoing consolidation of product control.
"When I started in 1962, there was 26 bottling plants for Coca Cola across Australia," he said.
"There was three in Tasmania. But in the early 1980s, they were combined into one company. And then those were closed and Tasmania gets all its supplies out of Melbourne.
He has fond memories of working for CCA.
"If it wasn't a good company, I wouldn't have spent 50-odd years there. It was a good company," he said.
The deal now just needs to be approved by the Supreme Court of New South Wales, which will make its decision next week, and the corporate regulator ASIC.
Assuming that goes through, the company is expected to cease trading on the ASX later this month and the shareholders are expected to get their sweet payday then.
Supplied: CCA
)Coca-Cola's Australian rightsholder set to be sold off to Europe - ABC News
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