Coca-Cola Amatil advised this morning that it has received a non-binding takeover proposal from Coca-Cola European Partners.

The company announced the bid in an investor update this morning, in which it also reported declines in trading revenue in the quarter but improved performance in alcohol, which it attributed in part to Feral Brewing Co.’s “strong performance”.

There are five major Coca-Cola bottlers in the world. CCA produces non-alcoholic beverages for Australia, New Zealand, Fiji, Indonesia and Papua New Guinea as part of the Asia Pacific region, whilst the European Partners group was formed in 2016 by a merger between Western Europe’s main Coca Cola bottlers. It is the world’s largest independent Coca Cola bottler by revenue, operating in 13 countries.

The US-based Coca Cola Company has large stakes in each of the major bottlers, but they operate separately in each market. It currently owns 30.8 per cent of CCA.

The deal would see the independent shareholders of Amatil sell to CCEP, with a cash offer made to all of them of $12.75 per share, minus any final dividends for the second half of 2020.

It also includes the separate acquisition of Amatil shares held indirectly by US-based The Coca-Cola Company, which it said would be on less favourable terms than those offered to the independent shareholders.

The deal could be worth around $10 billion according to reports this morning.

CCA’s group managing director Alison Watkins recommended the scheme to independent shareholders in “the absence of a superior proposal” and subject to an independent expert determining that the proposal was fair and in their interests.

CCEP justified the acquisition saying it would create a “broader and more balanced footprint for CCEP whilst almost doubling CCEP’s consumer reach, with the aim of ultimately driving sustainable and faster growth through geographic diversification and scale”.

A trading halt on Friday prompted speculation that the announcement would involve the Asahi brands being sold as part of the takeover of CUB earlier this year.

In the investor presentation update this morning, CCA also announced unaudited updates on its third quarter.

Compared to the previous corresponding period, trading revenue was down 4.2 per cent to $1.1 billion. Year to date revenues are down 7.6 per cent, but it heralded strong cash flows and a ‘solid’ balance sheet.

In Australia, it reported trading revenues of $707.5 million for the quarter, a slight decline of 0.9 per cent on the same quarter the year before. CCA said this was “significantly improved” despite lockdown impacts in Victoria and Auckland.

Growth in coffee and alcohol in the region rose 5.7 per cent to $122.4 million in trading revenue, compared to a decline of 2.2 per cent in non-alcoholic drinks.

Spirits rose 23.1 per cent in the third quarter, driven by the Jim Beam trademark and strong at-home consumption. Beer and cider were up 2.8% on the corresponding quarter last year, with a “strong performance” by Feral Brewing Co., it said, which it acquired in 2017.