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The Coca-Cola Company Message Board

  • mycrof4 mycrof4 May 21, 1998 4:56 AM Flag

    Sounds complicated but its just Ivester

    Dow Jones Newswires -- May 21, 1998
    Coca-Cola
    Amatil Demerger, Acquisitions Fair - Expert



    SYDNEY (Dow Jones)--Coca-Cola Amatil Ltd. (CCLAY), an
    Australian-based soft drink bottling concern, Thursday said an
    independent expert has found that a proposal to spin-off its
    European operations to create a new company is in the best
    interests of Coca-Cola Amatil shareholders.

    The
    expert, Grant Thornton & Associates, also found the
    acquisition by Coca-Cola Amatil of Korean bottling operations
    owned by Coca-Cola Co. (KO) of the U.S. is both fair
    and reasonable, the Australian company said in a
    statement.

    Grant Thorton reached a similar conclusion for the
    planned purchase by the new Europe company, Coca-Cola
    Beverages PLC, of Coca-Cola Co.'s businesses in
    North-Central Italy.

    The moves are part of a
    restructuring of the Coca-Cola group announced in early
    February, after which Coca-Cola Amatil will focus
    exclusively on developing businesses in the Asia-Pacific
    region.

    Under the plan, shares in Coca-Cola
    Beverages will be distributed on a pro-rata basis to
    existing shareholders in Coca-Cola Amatil by way of a
    capital return.

    However, Coca-Cola Amatil will
    provide the means for its shareholders, if they wish, to
    sell shares in the Europe company, which will be
    listed on the London Stock Exchange as well as the
    Australian Stock Exchange.

    Institutions will bid for
    the shares through a so-called book-building process
    operated by SBC Warburg Dillon Read. Coca-Cola Amatil said
    the price that its shareholders can expect to receive
    for their shares in Coca-Cola Beverages is likely to
    fall between A$3.40 a share and A$4.30 a
    share.

    Based on advice from the U.S. Securities Exchange
    Commission, U.S. shareholders won't be eligible to sell their
    shares in Coca-Cola Beverages via the book-building
    process, the company said.

    The Coca-Cola Co. will
    participate in the book-build share-bid process, buying about
    37 million shares to achieve a goal of taking an
    ultimate 50.1% stake in Coca-Cola Beverages.

    It
    will be helped to this target by Coca-Cola Beverages'
    purchase of the Coca-Cola Co.'s north and central Italy
    operations for about US$979 million, to be adjusted for
    certain elements including US$31 million for additional
    real-estate assets.

    The Europe company will issue
    213.3 million shares to Coca-Cola Co. in consideration
    for the business, with the balance paid in
    cash.

    Alternatively, San Miguel Corp. (SMGBF) of the Philippines
    intends to sell, via the book build, at least 50 million
    of a total 212.3 million shares that it will receive
    in Coca-Cola Beverages.

    The Coca-Cola Co.
    owns about 33% of Coca-Cola Amatil while San Miguel
    owns 25% of the Australian company.

    The Kerry
    Group hasn't made a decision on whether to hold or
    dispose of the 46.5 million shares in Coca-Cola Beverages
    that it will receive.

    A spokesman for
    Coca-Cola Amatil said the company is constrained for the
    moment in giving earnings forecasts on the new Europe
    company because of rules that it must follow in offering
    the shares in the U.K.

    However, it said that
    had Coca-Cola Beverages, encompassing the Italian
    bottling operations, started operations Jan. 1 last year
    it would have recorded a trading profit of 73.5
    million pounds (GBP) in 1997 on sales of GBP1.20
    billion.

    In contrast, the Korean operations that Coca-Cola
    Amatil plans to buy from Coca-Cola Co. for US$460.5
    million are forecast to incur a trading loss of A$12.9
    million in 1998 on sales of A$576.2 million. Depreciation
    of the Korean currency will hurt the operations'
    earnings, while that country's external and domestic
    economic conditions will remain difficult in 1998,
    Coca-Cola Amatil said.

    Coca-Cola Co., which will
    receive shares in Coca-Cola Amatil for the Korea
    business, will emerge with between 41% and 43.3% of the
    Australian company after the deal is completed.

 
KO
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