COCA-COLA EUROPACIFIC PARTNERS Plc current report, Q4 FY2020

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Business Context and Reporting Period

This Form 6-K filing by Coca-Cola Europacific Partners Plc (CCEP) is dated November 4, 2020. The report announces the execution of binding agreements for CCEP to acquire Coca-Cola Amatil Limited (CCL), a major bottler in the Asia Pacific region. The transaction is structured as a scheme of arrangement to acquire independent shares and a separate deed to acquire the stake held by The Coca-Cola Company (KO).

Key Financial Metrics and Transaction Terms

The filing details the financial terms of the proposed acquisition rather than CCEP's operational results for the period.

  • Offer to Independent Shareholders: CCEP will offer $12.75 per share in cash for 69.2% of CCL's issued share capital held by independent shareholders.
  • Offer to The Coca-Cola Company (KO): KO holds a 30.8% interest in CCL. CCEP will acquire 10.8% of CCL from KO at A$9.57 per share in cash. The remaining 20% will be acquired at A$10.75 per share, payable in cash or a combination of cash and CCEP shares.
  • CCL Historical Performance (FY19): CCL reported revenue of A$5.1 billion (approx. €3.1 billion) and EBITDA of A$1.0 billion (approx. €0.6 billion). Approximately 75% of this revenue is generated from Australia and New Zealand.
  • Financial Metrics for CCEP: The filing text does not provide specific revenue, profit, cash flow, or debt figures for CCEP for the current reporting period.

Material Changes and Strategic Rationale

The primary material change is the initiation of a transformative M&A transaction. The strategic rationale includes:

  • Market Position: The deal aims to solidify CCEP's position as the largest Coca-Cola bottler by revenue.
  • Geographic Expansion: The acquisition will double CCEP's consumer reach, adding access to populous emerging growth markets in the Asia Pacific region (Australia, New Zealand, Fiji, Indonesia, Papua New Guinea, Samoa).
  • Operational Synergies: Combining two leading bottlers to leverage shared best practices in revenue growth management, digital execution, and sustainability.

Guidance, Outlook, and Risks

Outlook and Timeline:

  • A Scheme Booklet is expected to be sent to shareholders in February 2021.
  • A shareholder vote is expected in early-mid March 2021.
  • Implementation is targeted for the end of Q1 2021, subject to conditions.
Conditions Precedent:
  • Shareholder and court approval.
  • Regulatory approvals from the Australian Foreign Investment Review Board and New Zealand Overseas Investment Office.
  • No material adverse change or prescribed occurrences.
Risks and Contingencies:
  • Integration Risk: Potential difficulties, delays, or higher costs in integrating the businesses.
  • Regulatory Risk: Failure to obtain necessary approvals or imposition of burdensome conditions.
  • Financing Risk: Ability to raise necessary capital for the transaction.
  • Operational Disruption: Diversion of management attention and potential loss of key employees.
  • Macro Risks: Ongoing impacts of the COVID-19 pandemic, economic downturns, and UK exit from the EU.

Investor Verification Checklist

  • Verify the final approval status of the Scheme by CCL shareholders and the relevant courts.
  • Confirm receipt of regulatory approvals from Australian and New Zealand authorities.
  • Monitor the independent expert's report to ensure the offer remains deemed "fair and reasonable."
  • Review the final financing structure, specifically the mix of cash versus CCEP shares for the KO portion of the deal.
  • Assess the impact of the transaction on CCEP's leverage ratios and liquidity once the deal closes.