As a result of the decision not to proceed, CCA said it expects to receive around AUD$34m from SABMiller

As a result of the decision not to proceed, CCA said it expects to receive around AUD$34m from SABMiller

Coca-Cola Amatil (CCA) has said it will not to exercise its right to buy any of Foster's Group's Australian spirits operations.

In an update on the potential acquisition of Foster's assets today (5 March), CCA said it has decided not to proceed with the purchase, having completed due diligence on Foster's Australian spirit and spirit RTD business.

As part of the fallout from SABMiller's takeover of Foster's last year, CCA obtained the right to acquire Foster's Australian spirits and non-alcoholic beverages operations and the group's Fiji Breweries and distillery in Fiji and Samoa. Late last month, CCA estimated that an outlay of up to AUD200m (US$135.6m) would cover the purchase of all these businesses.

As a result of the decision not to proceed with the Australian spirits buy, CCA said today that it expects the purchase of the other units, should it proceed, would total between AUD50m and AUD70m. The company is conducting due diligence on the remaining options.

Also, CCA now expects to receive a payment of around AUD34m from SABMiller, as a result of not acquiring the Foster's spirits assets. The funds will be used to support CCA's plans to expand its own alcohol operations. Late last year, the company posted a AUD59.8m one-off gain, after SABMiller bought CCA out of their Pacific Beverages beer joint-venture in Australia.

"CCA has developed an excellent manufacturing, sales and distribution platform for alcoholic beverages," said CCA's managing director, Terry Davis. "A key consideration in the due diligence process has been weighing up the relative brand health and value of the existing Foster's brands versus developing our Australian spirits and RTD brand portfolio organically by leveraging the portfolio of global Beam brands.

"With a strong pipeline of new Beam products to be launched into the market over the next 12 to 18 months, CCA has elected not to pursue the acquisition," he added.

Last month, CCA reported an increase in full-year net profits, boosted by the one-time gain from SABMilller.