Analysts are predicting a bidding war for the Australian home and office delivery water company Neverfail Springwater, following the hostile takeover bid by soft drink company Coca-Cola Amatil earlier this week.
Amatil on Tuesday launched a A$280m – or A$2.25 a share – takeover bid for Neverfail, Australia’s leading HOD player. However within hours of the announcement Neverfail’s board had rejected it calling it “inadequate”.
Shares in the business have since leapt on the belief that international soft drinks and water specialists such as Danone, Nestle and PepsiCo would contemplate making counteroffers.
Analysts have suggested a bid price close to A$2.50 or A$2.60 would be realistic.
Neverfail at its HOD competitors are an attractive prospect in Australia because only 15% of offices have bottled water delivered, compared to 30% in the US. Meanwhile home sales stand at only 1.5% of homes compared to 10% in the US.
Neverfail’s rejection of the offer is being seen as an attempt to flush out rival bids. Neverfail chairman Geoff Tomlinson said: “The CCA offer ignores the unique strategic opportunity that Neverfail represents to major international players.”
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By GlobalDataBut Amatil managing director Terry Davis was not concerned about any counter-offers. He said the offer price was an attractive 22% premium to Neverfail’s share price on April 28.
Furthermore Amatil already owns 15% of the stock, which may act as a blocking stake.
