Coke takeover price under water as share price bubbles


It is easy to see why non-Coke aligned investors thought the company was being stolen from beneath them despite the fact that the deal had the unanimous support of the Coca-Cola Amatil board.

Since then Coca-Cola Amatil’s share price has not only improved but has risen beyond the offer price.

Thus the offer from Coke in Europe looks not just opportunistic but poorly timed.

Had that price been proposed earlier in the year (when the shares were at $8) it may have succeeded. But given the parent, The Coca-Cola Company in Atlanta, controls all its bottlers, it probably doesn’t subscribe to the view that it needs to offer a regular control premium.

The trouble is that, given it doesn’t get to vote its shareholding, it is up to minority shareholders to decide the takeover’s success.

Based on a positive-ish earnings update last week, the share price has taken another leg up and at Monday’s price of $13.14 there will be significant pressure on institutional shareholders to reject the bid.

If they do they will be rolling a dice on whether Coke Europe will come back with a higher offer.

Citi’s analyst Craig Woolford now sees a 35 per cent chance of a sweetener being added to the offer and a 50 per cent chance the offer will proceed at $12.75.

It took 18 months of haggling with the Coca-Cola Amatil board to come up with the $12.75 offer. In March 2019 Coke Europe started the process with an offer of $10 a share when the stock was trading around $8.50.

Coke Europe could walk away from the $12.75 per share deal – or stump another 40 to 50 cents which analysts reckon would get it over the line.

Citi’s analyst Craig Woolford now sees a 35 per cent chance of a sweetener being added to the offer and a 50 per cent chance the offer will proceed at $12.75.

It rates the chances of no deal at 15 per cent – in which case it believes the Coca-Cola Amatil share price will fall to $11.

Macquarie sees ‘upside risk’ to the $12.75 share offer – which means it thinks there is a possibility the bid price will be lifted. Its analyst Ross Curran says the earnings update raises the risk that shareholders may vote against the scheme if the price is not improved.

This is not a company with a long-term growth trajectory. It has been attempting to replace falling sales from carbonated sugary soft drinks with other healthier-product sales and sugar lite options (plus some alcoholic beverages) for 10 years or more.

Despite some success it’s hard to fight the reality that its mainstay is still fizzy sugary drinks. Having said that, 2020 was a particularly poor year for Coca-Cola Amatil.

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While overall volumes were still down in the fourth quarter the trend was improving from earlier COVID affected quarters. In Australia and New Zealand volumes started growing in the fourth quarter – albeit only marginally in Australia.

Analysts may see the better performance from NZ as a proxy for what volumes could look like in other territories given volumes across the ditch were hit less by lockdowns.

Overall, Coca-Cola Amatil volumes continue to be dragged down by Indonesia which is still battling with COVID and its economic consequences.

The company, under chief executive Alison Watkins, has made a decent fist of improving the cost base over the past five years. But that said the company has still been something of a chronic underperformer.

So minority investors in Coca-Cola Amatil have a lot at stake. Either accept the offer on the table, take a punt that the offer will be improved or risk the offer disappearing and the share price falling.

Given the stock is trading above the offer price, the market appears to be betting the offer will be raised.

Spare a thought for the uncomfortable position in which Coca-Cola Amatil directors find themselves- they are, in effect, now recommending an offer that is at a discount to the share price.

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Canada’s Couche-Tard drops $20 bln Carrefour takeover plan after French govt opposition-sources


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The plan included a pledge to keep the new entity’s global strategic operations in France and having French nationals on its board, he said.

Couche-Tard, advised by Rothschild, was also going to pump about 3 billion euros of investments into the French retailer which was working on the deal with Lazard.

The proposal was widely backed by Carrefour which employs 105,000 workers in France, its largest market, making it the country’s biggest private-sector employer.

France’s rejection of the deal less than 24 hours after talks were confirmed sparked grumbling in some business circles over how French President Emmanuel Macron, a former investment banker, is turning away foreign investment.

Some politicians and bankers said the pushback could tarnish Macron’s pro-business image, while others highlighted that the COVID-19 crisis had forced more than one country to redefine its strategic national interests.

WHITE FLAG

Amid a trans-Atlantic flurry of lobbying, Couche-Tard’s Bouchard – who started his convenience store operations in 1980 – flew to Paris to explain the merits of the deal to Le Maire, the source said.

But the finance minister reiterated his opposition without listening to the terms of the transaction and said any such deal should not be revisited before France’s presidential elections in 2022, the sources said.

Couche-Tard initially explored the possibility of pursuing its offer despite the government’s stance on the deal, but later decided to raise the white flag and avoid a political storm, one of the sources said.

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NRL Super League takeover talk wide of mark


The NRL hasn’t held discussions about acquiring a stake in the Super League, instead focusing on finalising a pay deal with its players that will likely be announced next week.

The UK’s Sky News has reported the NRL have been in negotiations to purchase a 50 per cent share of the English competition, suggesting that stake could be valued at approximately £75 million ($134m). However, the Herald has been told that no such discussions have taken place between the parties.

Powerbrokers at Rugby League Central believe the report is a ploy to drive up the price of the Super League, which has engaged banking giant Rothschild & Co to source potential investors.

The NRL wants to foster a closer relationship with the Super League and may give some consideration to an equity stake in the future. The governing body doesn’t own a single asset, something Australian Rugby League Commission chairman Peter V’landys has stated he wants to rectify.



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Village Roadshow saga close to over with revised takeover bid on the brink of success


Prominent buyout firm BGH Capital is on the brink succeeding with a revised takeover bid for embattled theme parks and cinema operator Village Roadshow despite an ongoing revolt by major independent shareholder, New York-based Mittleman Brothers.

BGH, which is led by high profile dealmakers Ben Gray and Robin Bishop, has hit several snags along the way in its attempt to buy the owner of the Wet n’ Wild and Seaworld theme parks and other film distribution assets because the company’s two biggest independent shareholders Mittleman Brothers and Spheria Asset Management were unhappy with the initial offer on the table. But BGH’s final offer, worth up to $3 per share, is now expected to succeed and put an end to the year-long rollercoaster ride after proxy votes submitted over the weekend showed signs of shareholder approval.

The attempted takeover of Seaworld owner Village is looking highly likely despite a revolt from the company’s biggest independent shareholder.Credit:Glenn Hunt

Sources briefed on the votes submitted over the weekend who spoke on the condition of anonymity said the Board is expecting scheme A – which values the company’s shares at $3 – could be approved based on the number of votes already in favour of the deal.

The sources said dissident shareholder Mittleman, which owns more than 15 per cent of the company, has used some of its shares to vote against the $3 per share offer but is expected to decide on what to do with its remaining shares at the scheme meeting on Monday.



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Village Roadshow saga close to over with revised takeover bid on the brink of success


Prominent buyout firm BGH Capital is on the brink succeeding with a revised takeover bid for embattled theme parks and cinema operator Village Roadshow despite an ongoing revolt by major independent shareholder, New York-based Mittleman Brothers.

BGH, which is led by high profile dealmakers Ben Gray and Robin Bishop, has hit several snags along the way in its attempt to buy the owner of the Wet n’ Wild and Seaworld theme parks and other film distribution assets because the company’s two biggest independent shareholders Mittleman Brothers and Spheria Asset Management were unhappy with the initial offer on the table. But BGH’s final offer, worth up to $3 per share, is now expected to succeed and put an end to the year-long rollercoaster ride after proxy votes submitted over the weekend showed signs of shareholder approval.

The attempted takeover of Seaworld owner Village is looking highly likely despite a revolt from the company’s biggest independent shareholder.Credit:Glenn Hunt

Sources briefed on the votes submitted over the weekend who spoke on the condition of anonymity said the Board is expecting scheme A – which values the company’s shares at $3 – could be approved based on the number of votes already in favour of the deal.

The sources said dissident shareholder Mittleman, which owns more than 15 per cent of the company, has used some of its shares to vote against the $3 per share offer but is expected to decide on what to do with its remaining shares at the scheme meeting on Monday.



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CP Group takeover of Tesco’s Thai unit raises alarming questions


Pavida Pananond is professor of international business at Thammasat University, Bangkok

A recent decision by Thailand’s competition watchdog, the Office of Trade Competition Commission, to approve the $10.6 billion takeover by Charoen Pokphand Group of Tesco Lotus, a hypermarket chain, is a blow to investor confidence in the country. The decision raises alarming questions about the integrity of the OTCC — a supposedly reinvigorated reincarnation of a former regulator — and demonstrates the power of the country’s entrenched big-business oligarchy.

By ignoring the competition dynamics of modern retail sectors, the OTCC risks aggravating the concentration of the sector in the hands of three conglomerates — CP Group, Central Group and TCC Group, all run by billionaire family owners — and undermines confidence in Thailand’s overall business environment.

The OTCC ruled that CP Group’s acquisition of Tesco’s network of almost 2,000 hypermarkets and smaller format stores in Thailand will result in increased market power, but will not create a monopoly across the retailing sector.

Prior to the Tesco acquisition, CP Group already operated in most of the country’s key retail sectors, running nearly 12,000 7-Eleven convenience stores under license from 7-Eleven Inc, a U.S. subsidiary of Japan’s Seven & i Holdings, 134 Makro Cash & Carry stores, 610 CP Fresh Mart supermarkets, and a number of e-commerce platforms, according to annual reports. The latest acquisition increases the group’s market share in the hypermarket sector from 24% to 63%, with control over both the Makro chain and Tesco Lotus, according to an analysis by Krungsri Research.

Why is this ruling so contentious? First, the agency’s interpretation of market power ignores the reality of modern retailing, in which hypermarkets, convenience stores, supermarkets and online platforms are channels distributing relatively similar products to consumers. Overlooking the Tesco acquisition because it may not result in a monopoly in one type of market is missing the forest for the trees.

Dominant retailers like CP Group exert power over both consumers, using prices and other marketing tactics to attract shoppers, and suppliers who face pressure to reduce prices. An increase in competitive pressure at both ends would lead to benefits for both consumers and suppliers.

Among the conditions placed on the powerful conglomerate are a three-year ban on future acquisitions in the modern trade sector, excluding e-commerce, a requirement to increase product-sourcing from small and medium enterprises and community producers and maintain contracts with existing suppliers and distributors for two years, and a prohibition on sharing trade secrets between the merged entities.


A Makro store in Bangkok, pictured in September 2018: the latest acquisition increases CP Group’s market share in the hypermarket sector from 24% to 63%. (Photo by Akira Kodata)

While these requirements ostensibly make the ruling more palatable, some may be too impractical to enforce. How can the OTCC determine what information cannot be shared among CP’s Tesco Lotus, 7-Eleven, and Makro arms? More perplexingly, the exclusion of e-commerce platforms from the temporary ban on acquisitions means that CP can potentially dominate online sales as well as brick-and-mortar retailing.

Rulings that overlook the contemporary dynamics of the retail industry risk undermining the agency’s effectiveness. The OTCC’s predecessor showed that weak enforcement of competition policy, combined with market-distorting measures such as unreasonable operational requirements, strengthened the dominance of powerful big businesses and stifled competition. Earlier examples include beer, duty free shops, and cable TV networks.

Such tolerance of oligarchic control carries broader consequences. Lenient enforcement of competition policy turns scale and scope into key advantages for domestic conglomerates, sometimes at the expense of skills and of smaller competitors. While size certainly matters, dominance at home does not necessarily translate into success abroad. Moreover, oligarchic control of the economy will inhibit the rise of smaller but more innovative businesses.

Unsurprisingly, Thai companies are absent in sectors in which innovation matters more than size. For example, there is not one Thai company in the top 10 Southeast Asia unicorns — startup companies worth more than $1 billion — listed by Techsauce, a Thailand-based technology and business media group that plays a key role in the tech startup ecosystem. Indonesia is home to four, Singapore three, Malaysia, the Philippines and Vietnam one each. The dominance of a handful of Thai oligarch-style companies, led by CP, is stifling dynamism and innovation in small and medium sized enterprises, squeezing Thailand’s long-term competitiveness and economic growth.

Blatant displays of economic inequality and the concentration of wealth among a clutch of domestic conglomerates do not bode well for Thailand’s attractiveness for foreign investment. In the 2019 annual Global Competitiveness Index, the World Economic Forum ranked Thailand 85th of 141 economies for the severity of market dominance, with Vietnam 47th, Indonesia 50th and Malaysia 9th. Allowing such overwhelming dominance of the corporate sector deters potential foreign investors, which either collaborate with the big companies to reduce entry barriers, or ignore Thailand because unfair trade practices are so widely tolerated.

While Thailand needs an agency like the OTCC, the office and its principles matter little if it cannot call a spade a spade. Its behavior risks undermining domestic and international public trust in how Thailand manages competition policy. This casts doubt on the effectiveness of the agency, and wastes the opportunity to address the long-lasting and structural problem of economic inequality in Thailand.

The OTCC should adhere to the fundamental goals of promoting and protecting competition in a broad variety of market settings. Without a more even playing field, Thailand will be hard-pressed to persuade foreign investment partners and stakeholders to place business bets on a country that is going in the wrong direction. Without a change of course the OTCC risks becoming irrelevant.





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BGH Capital to lift Village Roadshow takeover offer


Melbourne-based private equity firm BGH Capital has lifted its bid for cinema, film and theme parks operator Village Roadshow after two major independent shareholders rejected its earlier offer.

Market sources told The Sydney Morning Herald and The Age that BGH will offer two scheme arrangements which value the theme park and cinema operator’s shares at about $3, a significant improvement on the current proposals worth $2.32 and $2.22 respectively.

The bids for Village Roadshow value the group at $2.32 and $2.20 a share. Credit:Scott McNaughton

Village entered a trading halt on Thursday morning after the Herald and The Age revealed a second major independent shareholder would vote against the existing takeover offer. Spheria Asset Management, which owns 7.8 per cent of ASX-listed Village, said it would vote against two takeover structures proposed by the Melbourne-based buyout firm under the current terms. Spheria co-founder and portfolio manager Matthew Booker previously said $3 was a fair price, meaning it’s likely the firm will accept a revised bid.

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Spheria’s decision came days after the company’s biggest independent shareholder, US-based Mittleman Brothers, increased its stake in the company to 14.4 per cent. Mittleman chief investment officer Chris Mittleman said he $5 per share was more reasonable.

The two companies hold a combined 22.2 per cent of the cinema and theme parks operator, enough to block the first scheme of arrangement – a $2.32 per share offer – and almost enough to thwart scheme B – a $2.22 per share offer – even without the votes of other shareholders. This meant that BGH’s only choice was to revise the bid or walk away altogether.

Village, which owns Sea World and Wet n Wild said the trading halt is pending an announcement. Shares were at $2.45 before suspension of trading.



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Azerbaijan delays takeover, denounces fleeing Armenians


“Armenians are damaging the environment and civilian objects. Environmental damage, ecological terror must be prevented,” Hajiyev said.

Prior to a separatist war that ended in 1994, Kelbajar was populated almost exclusively by Azerbaijanis. But the territory then came under Armenian control and Armenians moved in. Azerbaijan deemed their presence illegal.

Cars and trucks stuck in a huge traffic jam climbing along the road from Kalbajar to a mountain pass leaving the separatist region of Nagorno-Karabakh to Armenia.Credit:AP

“The placement and settlement of the Armenian population in the occupied territory of the Kelbajar region was illegal … All illegal settlements there must be evicted,” Hajiyev said.

The imminent renewal of Azerbaijani control raised wide concerns about the fate of Armenian cultural and religious sites, particularly Dadivank, a noted Armenian Apostolic Church monastery that dates back to the ninth century.

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Azerbaijani President Ilham Aliyev assured Russian President Vladimir Putin, who negotiated the cease-fire and is sending about 2000 peacekeeping troops, that Christian churches would be protected.

“Christians of Azerbaijan will have access to these churches,” Aliyev’s office said in statement Sunday.

Azerbaijan is about 95 per cent Muslim and Armenia is overwhelmingly Christian. Azerbaijan accuses Armenians of desecrating Muslim sites during their decades of control of Nagorno-Karabakh and surrounding territories, including housing livestock in mosques.

The Armenian Foreign Ministry on Sunday denounced vandalisation of the Ghazanchetsots cathedral in the Azerbaijan-held city of Shusha as “outrageous.” The Armenian Apostolic Church earlier said vandals defaced walls of the church after Azerbaijani forces took the city.

Nagorno-Karabakh was an autonomous republic of Azerbaijan during the Soviet period. A movement to join with Armenia arose in the late Soviet years and after the Soviet Union collapsed, a war erupted in which an estimated 30,000 died and hundreds of thousands of people were displaced.

Sporadic clashes erupted after the war ended in 1994 and international mediators unsuccessfully sought for a resolution of the dispute. Full-scale fighting flared anew on September 27. Azerbaijan made significant advances and a week ago announced that it had seized the strategically critical city of Shusha. The cease-fire agreement came two days later.

A woman lights candles inside a church of the Dadivank, an Armenian Apostolic Church monastery dating to the 9th century, as ethnic Armenians leave the separatist region of Nagorno-Karabakh to Armenia.

A woman lights candles inside a church of the Dadivank, an Armenian Apostolic Church monastery dating to the 9th century, as ethnic Armenians leave the separatist region of Nagorno-Karabakh to Armenia.Credit:DMITRY LOVETSKY

Armenia says 1434 servicemen died in this year’s fighting, but civilian casualties are unclear. Azerbaijan hasn’t stated its losses.

The cease-fire agreement and cession of territories was a strong blow to Armenia and prompted protests against Prime Minister Nikol Pashinian.

On Saturday, Artur Vanetsyan, the leader of a small centre-right party who formerly headed the national security service, was arrested on suspicion of plotting to assassinate Pashinian. He was released from custody Sunday and it was unclear if the charges against him would stand.

The agreement also dismayed many Armenians who had hoped for Russian support in the conflict. Russia and Armenia are part of a defence alliance and Russia has a large military base in Armenia.

“Our nation has lost everything, our heritage, everything. We have nothing left. I can’t say anything. I’m only begging Russian people to help us, so that at least others can have a better life in our own land,” said Seda Gabrilyan, a weeping mourner at the Sunday burial of a Nagorno-Karabakh soldier in Stepanakert, the regional capital.

AP

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Jonker breaks Takeover Target’s course record


The great Takeover Target’s 15-year-old Doomben 1200m course record was lowered in spectacular fashion on Saturday as former boom youngster Jonker wound back the clock to win the Keith Noud Quality.

In stopping the clock in a blistering 1:7.83, Jonker gave Tony Gollan three consecutive wins in the race and one of his more satisfying training successes, given the five-year-old had gone winless since winning his first two starts almost three years ago.

Gollan took over the training of Jonker 12 weeks ago and set him on a specific path to target the summer carnival. He had been confident the way Jonker was going, before barrier 15 put a dampener on his enthusiasm.

Jockey Jim Byrne went with a specific plan to be positive out of the gates and after beginning like a bomb, he proceeded to run his rivals into the ground.

Gollan has trained many of the Spirit Of Boom progeny, but considers Jonker to be the most like his dad of any of them.

“He reminds me so much of his father. It’s just like having (Spirit Of Boom) back in the stable again,” Gollan said.

“We took plenty of time to get him ready and he put the writing on the wall in the trial, but I guess we just wanted to see some intent on raceday.”

Jonker will run next in the George Moore Stakes on December 5 and then work his way to the Magic Millions on January 16.

Jonker beat Boomtown Lass in his Eagle Farm trial and that form stood up in the previous event.

Chris Anderson quipped that it may well be better for Boomtown Lass to draw off the track than so called ‘cosy’ draws after she was able to face the breeze three wide the whole way and still win.

Boomtown Lass won from barrier 13 first-up two preparations back and then narrowly missed from gate 12 fresh last time in. On Saturday she drew five, but Justin Huxtable still found himself three deep, yet she found plenty in the straight to win her sixth race and nudge her earnings close to $500,000.

“Full credit to Justin. He didn’t panic, took his medicine and just made sure she was travelling the whole way,” Anderson said.

The next challenge is to win a stakes race, having finished the closest of seconds behind Scallopini at Listed level last time in.

Dusty Tycoon delighted hundreds of her MiRunners owners when prevailing under Alex Patis to notch her third career win.

“I love what MiRunners do for racing and the amount of joy they bring to so many people,” Dusty Tycoon’s trainer Rob Heathcote said. “Half an hour before the race, around at the stalls, you can sense the excitement (with the owners) and it’s tangible.”

Heathcote completed a winning double when Plitvice prevailed narrowly in the Class 6 Handicap. “He’s a horse that’s near and dear to us, with a lot of our close friends in him,” the trainer said.

RAW KING HAS BRIGHT FUTURE

Steve O’Dea has another smart galloper on his hands in the shape of Dominant King, who came from well off the pace to carve out fast time in his introduction to Saturday racing at Doomben.

O’Dea, who now trains in partnership with long-time foreman Matt Hoysted, had expressed surprise how Dominant King was beaten on debut at the Sunshine Coast and was relieved to see him take improvement and win next time out at Ipswich.

The Deep Field gelding took another giant leap forward on Saturday, coming from worse than midfield to stop the clock in 1:8.67 for the 1200m. Punters knew Dominant King’s potential, backing him to displace Kavak at the top of the market and run the $3.20 favourite.

The biggest challenge for O’Dea now may well be to keep the horse in the stable, as there’s sure to be offers coming from Hong Kong.

For now though, he’s hoping to get Dominant King through to the Magic Millions in January.

“He’s still a bit green and is a work in progress,” O’Dea said. “He’s still a bit of a kid. He has a lovely big action, but is probably still learning how to use himself.

“He’s definitely a horse on the way up.”

Dominant King races in the colours of Joe Rapisarda, who has raced a string of handy horses with the stable over the years. It completed a winning double for Ben Thompson, who won earlier on the Chris Munce-trained Rhapsody Rose.

Munce has flagged a Magic Millions start for Rhapsody Rose, but is more looking forward to how she shapes up next season after she broke through at Doomben. Rhapsody Rose led throughout to deny easing favourite Conexy in the two-year-old event.

“She’s still immature and is going to be a lot better three-year-old,” Munce said. “I think she’s a very good filly. She’s still a bit new.”



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Analysts applaud $6.4b takeover bid for AMP


AMP’s US suitor Ares has shown its cards to the market, lobbing a $6.4 billion bid for the ailing wealth giant, an offer that analysts say could be hard to top.

The conditional $1.85 per share offer from the Los Angeles-headquartered firm comes almost two months after AMP put parts of the company up for sale. It’s above analyst expectations and has been welcomed by the market.

AMP shares, which jumped almost 20 per cent on Friday when Ares’ offer was first made public, gained more ground on Monday, closing the session 9.8 per cent higher at $1.68.

AMP offered generous takeover deal. Credit:Getty

Atlas Funds Management chief investment officer Hugh Dive, who does not own shares in AMP, said other offers would have to come from offshore, which was unlikely.



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