Lion left parched
Lion Nathan has pulled out of a merger deal with Coco-Cola Amatil after discussions between both companies' major shareholders fell through.
A major beverages merger is off after the parties' major shareholder companies pulled the plug.
Lion Nathan has withdrawn its proposal to merge with Coca-Cola Amatil following the announcement on Saturday that CCA's parent, The Coca-Cola Company, had terminated its own discussions with Japanese brewer Kirin Holdings about the CCA-Lion merger.
Kirin is Lion's major shareholder,and Coca-Cola not only owns 30 per cent of CCA, but is also CCA's major supplier.
However, Saturday's announcement, delivered by CCA, did surprise Lion, with the local beverage company saying Coca-Cola had not "meaningfully engaged” with its offer.
"We made a very attractive offer at a 30 per cent premium in very challenging market conditions," said Lion chief executive Rob Murray in a statement. "It is disappointing that CCA's shareholders will not have the opportunity to consider our proposal and enjoy the benefits that the merger would have delivered."
Lion's offer was always an audacious one, valuing CCA at 10.5 times earnings, compared with Asahi's valuation of Cadbury Schweppes at multiple of 15.
Furthermore, competition regulators would have doubtlessly put up a roadblock and, most importantly, Lion had not even obtained Coca-Cola's consent to the deal.
"Lion made this uninvited merger proposal contingent on acquiring all of The Coca-Cola Company's shares,” CCA managing director Terry Davis said.
"Lion could have approached this merger in any number of ways – for instance acquiring the 70 per cent of CCA shares not held by TCCC, but they specifically rejected all other structures.”
With the cash and scrip proposal off the cards, Lion says it will focus on its growth strategy and 2009 earnings set up. Murray said Lion was not prepared to continue with the proposal unless all parties were "willing to try".
Lion was advised by Caliburn, while a team at Macquarie, led by Robin Bishop in Melbourne, advised CCA.
Lion Nathan has withdrawn its proposal to merge with Coca-Cola Amatil following the announcement on Saturday that CCA's parent, The Coca-Cola Company, had terminated its own discussions with Japanese brewer Kirin Holdings about the CCA-Lion merger.
Kirin is Lion's major shareholder,and Coca-Cola not only owns 30 per cent of CCA, but is also CCA's major supplier.
However, Saturday's announcement, delivered by CCA, did surprise Lion, with the local beverage company saying Coca-Cola had not "meaningfully engaged” with its offer.
"We made a very attractive offer at a 30 per cent premium in very challenging market conditions," said Lion chief executive Rob Murray in a statement. "It is disappointing that CCA's shareholders will not have the opportunity to consider our proposal and enjoy the benefits that the merger would have delivered."
Lion's offer was always an audacious one, valuing CCA at 10.5 times earnings, compared with Asahi's valuation of Cadbury Schweppes at multiple of 15.
Furthermore, competition regulators would have doubtlessly put up a roadblock and, most importantly, Lion had not even obtained Coca-Cola's consent to the deal.
"Lion made this uninvited merger proposal contingent on acquiring all of The Coca-Cola Company's shares,” CCA managing director Terry Davis said.
"Lion could have approached this merger in any number of ways – for instance acquiring the 70 per cent of CCA shares not held by TCCC, but they specifically rejected all other structures.”
With the cash and scrip proposal off the cards, Lion says it will focus on its growth strategy and 2009 earnings set up. Murray said Lion was not prepared to continue with the proposal unless all parties were "willing to try".
Lion was advised by Caliburn, while a team at Macquarie, led by Robin Bishop in Melbourne, advised CCA.
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