AUSTRALIA: CCA plays down South Korean sale rumours

By | 10 November 2006

Reports from Australia are lining up potential suitors should Coca-Cola Amatil's South Korean beverage business be sold, while CCA insists that no offers, formal or informal, have been received.
 
CCA has told The Australian Financial Review that CCA would conduct a review of South Korea early next year as part of its three-year strategic planning, but has no plans to sell the beverage unit yet.

Reports link Israeli bottler Central Bottling Co to an acquisition on the unit, but CCA chief executive Terry Davis has played down the speculation.

He reportedly told the review: "We'll come out by the end of the first quarter with where we see the business heading for the next two to three years and where we see South Korea heading."
 
In a six-month trading update on Wednesday (10 November), CCA noted that the South Korean business was materially impacted by a product recall in July, following an extortion.

The extortion threat affected Coca-Cola in PET packages in the areas of Kwangju, Hwasoon and Damyang.

On 11 July, just-drinks reported that a woman in South Korea was arrested for allegedly lacing the bottles with poison in an attempt to extort the company.

The recall was estimated to involve 40,000 physical cases of product.

As a result, total volume in South Korea has declined by approximately 7%, CCA said in Wednesday's update.

The company added: "Based on current forecasts it may take six to 12 months for volumes to return to pre-extortion levels. The impact of the extortion is the subject of an insurance claim which covers CCA for product recall costs, loss of gross profit and brand rehabilitation costs over a twelve month period."

Sectors: Soft drinks

Companies: CCA

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