Coca-Cola Amatil has hailed SABMillers purchase of Fosters as “a great deal”

Coca-Cola Amatil has hailed SABMiller's purchase of Foster's as “a great deal”

The head of Coca-Cola Amatil (CCA) has hailed SABMiller's takeover agreement with Foster's as "a great deal" for the company.

Earlier this week, SABMiller agreed a deal to buy Foster's Group, in a deal valuing the business at AUD12.3bn (US$12.6bn), including debt. Foster's' management had previously rejected SABMiller's earlier approach at AUD4.9 per share.

When contacted by just-drinks yesterday (22 September), CCA's group managing director, Terry Davis, described the transaction as "a great deal for CCA and our shareholders".

"Should the SABMiller acquisition of Foster's Group go ahead, we believe this is a great deal for CCA and our shareholders as it represents a strong return on our investment," Davis said. "It will deliver approximately AUD$305m (US$298.9m) to CCA and we will also get the opportunity to acquire some Foster's assets - spirits, RTDs, soft drinks and the Fiji brewery - at very low multiples which means they will be immediately EPS accretive to CCA."

Davis noted that, following the purchase, CCA will continue to brew beer outside Australia, but will observe "a non-compete in beer for two years" in its domestic market.

The purchase will affect SABMiller and CCA's beer joint-venture in Australia, Pacific Beverages, with SABMiller becoming legally-entitled to purchase CCA's 50% share of the division. CCA will then be restrained from selling, distributing or manufacturing beer in Australia for at least two years.

Nonetheless, Davis said: "We are still in the business of alcohol - it's is a key future growth pillar for CCA. Our Beam spirits and RTD portfolio will not be affected by the SABM/Foster's deal and we'll be focusing on growing the Beam partnership, where we produce, sell and distribute Australia's biggest selling RTD, Jim Beam and Cola."

CCA signed a ten-year "incentive-based" agreement with Fortune Brands in March, which sees the soft drinks maker continue with the sale and distribution of Beam Global's products that Pacific Beverages cemented in 2007.

CCA also produces Beam Global's RTD brands in the country. Through the SABMiller and Foster's deal, CCA will obtain the right to acquire either all or part of Foster's Group's domestic spirits and soft drinks businesses.

However, Davis added: "Until the SABMiller/Foster's deal goes through our teams will be continuing to service our licensed customers as usual with our full portfolio."