Thirsty predator

Caliburn Partnership, JPMorgan, Macquarie Group and Deutsche Bank are acting in the key roles as Lion Nathan and its Japanese major shareholder Kirin pursue CC Amatil with an $8 billion cash and scrip offer.

The offer, released to the market today although apparently made to CC Amatil on November 7, is most notable for Kirin's cash support of the proposal – which is so far being resisted by the target.

The cashed-up Kirin proposes to provide $3.7 billion of the $4.5 billion cash component, buying Lion Nathan shares at a 28 per cent premium to their last trading price. This serves two purposes: it would maintain, and even lift slightly, Kirin's 46 per cent stake in Lion after the merger, and also serves to lift the value of Lion scrip in the proposal.

A JPMorgan team led by Grant Dempsey is advising Kirin, and will conduct the placement of Lion shares, while long-time Lion advisor Caliburn, with a team led by Ron Malek, Roger Feletto and Bryan Pearson, is doing the work for Australian beverage group. Caliburn also advised Kirin on the purchase of National Foods. Deutsche was a late addition to the team, acting as broker to the issue and providing market advice.

CC Amatil is being represented by a Macquarie team led by Robin Bishop. Legal work is being done by Mallesons Stephen Jaques for Lion, with a team comprising of Meredith Paynter and Adrian Perkins (M&A), Sharon Henrick (competition), Nuncio D'Angelo (banking) and Judy Sullivan (tax). Blake Dawson is doing the work for Kirin and Gilbert & Tobin for CC Amatil.

Kirin is proposing to pay $11.50 each for its extra shares in Lion, well above the $8.95 last trading price of Lion on November 14. The post placement value of Lion shares is put at $9.92, helping lift the value of the "base offer” by around 45 cents a share to $10.80.

The base offer represents $6.15 cash and 0.469 Lion shares for every CC Amatil share, although there is a 'mix and match' facility which allows accepting shareholders to take a maximum cash component of $1.025, or a maximum scrip component of 1.71 Lion shares for every CC Amatil share.

Lion Nathan says it expects to generate around $100 to $130 million in annual synergy savings from the merger.

CC Amatil says the offer represents a premium of around 22 to 25 per cent from its recent share price, but does not reflect the multiples gained in recent transactions in the sector.

It also says there are "material deficiencies” in the proposal, which is subject to a number of conditions. CC Amatil shareholders would emerge with around 28 per cent of the merged group, but the top two executive postings would go to Lion.