19 February 1998: In a major restructure, Coca-Cola Amatil (CCA) is to separate its European businesses from the rest of its interests and list them in a separate company, Coca-Cola Beverages (CCB)…
19 February 1998: In a major restructure, Coca-Cola Amatil (CCA) is to separate its European businesses from the rest of its interests and list them in a separate company, Coca-Cola Beverages (CCB). Over the last few years, CCA has been acquiring soft drink interests in Asia and Europe, most notably its A$ 2.7 billion acquisition of Coca-Cola Bottlers Philippines from San Miguel Brewing Company. CCA has found it has two separate interests with the organisation and as such has decided to split the company in two based on its two geographical components. Shareholders in CCA will be given shares in the new European entity, Coca-Cola Beverages. CCA will retain its operations in Asia, Australia and New Zealand, and is to purchase a South Korean bottling business from the US Coca-Cola Company for A$ 877 million in shares. The US company will also sell an Italian bottling operation to CCB for A$ 1.46 billion in cash and shares. It is speculated that the driving forces behind the restructure were CCA“s two large Asian shareholders Robert Kouk and San Miguel, who were concerned about the impact of the Asian currency crisis. However analysts believe CCA will have trouble convincing shareholders of the wisdom of the plan, especially as the European branch has been performing poorly. In the meantime, Coca-Cola Amatil has announced a 73% surge in annual net profits to A$ 242.2 million, but has lost A$ 900 million worth of assets, supposedly due to Asia“s foreign currency crisis. The surprising profit result was largely driven by CCA“s 1997 purchase of Coca-Cola Bottlers Philippines and a sales increase of 30%. Australian sales revenue was up 6%. CCA says it is delighted at the result but warns the Asian economic crisis could affect the 1997-98 results, especially when translated into A$. CCA asset values decreased in 1997 from A$ 10.4 billion to A$ 9.5 billion after a 21% drop in the value of the Philippine peso.