Frou Frou announces interest in Coca Cola
GREEK Coca Cola’s 100 per cent bid for the Lanitis Bros soft-drinks empire ran into trouble yesterday when local food manufacturer Frou Frou said it was also considering entering the race to buy up the long-established Cypriot company.
Share trading in both Cypriot companies was suspended yesterday after an announcement by Frou Frou’s Alkis Hadjikyriakou that it might be interested, amid rumours and speculation that there was dissent amongst the Lanitis shareholders. This was fuelled by the resignation of one board member of Lanitis earlier in the week.
“The board of directors is convening to examine the possibility of submitting an improved offer for the acquisition of the share capital of Lanitis Bros Public Ltd.,” Frou Frou said in a statement to the Cyprus Stock Exchange. However by evening the company had made no further announcements.
The Frou Frou statement came as a total surprise as it was assumed a deal had been done with the Greek firm CCHBC, the world’s second-largest bottler of Coca Cola products. Lanitis, which has been bottling and distributing Coca Cola in Cyprus since 1955, is the third.
Currently the main shareholder in Lanitis Bros, which was founded by Nicholas C Lanitis in 1943 and who died earlier this year, is Vladimiros Lanitis with a 50.6 per cent stake, followed by Evie Lanitis with 7.62 per cent and her brother-in-law, General Manager, Michalis Spanos with 6.3 per cent.
Vladimiros Lanitis said on Thursday he planned to accept the CCHBC offer, but the move by Hadjikyriakou yesterday prompted speculation that the other two major shareholders were against the sale of the company, and that the move by Frou Frou was an attempt to keep the Lanitis company in Cypriot hands. It is believed that Hadjikyriacou already owns a 0.12 per cent stake in Lanitis Bros..
On Thursday CCHBC said it would offer to buy Lanitis for around $90 million (£43 million) to expand further into the non-carbonated soft drinks market. The bid puts the acquisition of Lanitis Bros at 17.2 cents a share.
According to an analysis of the deal done by the Financial Mirror, the Greek bid is significantly lower than the book value of Lanitis Bros, which is estimated at 24 cents per share.
“The analysis also found that Lanitis Bros has £5 million cash, which means the cost of acquisition is in fact £38 million, or 15.2 cents,” the online paper said.
One stockbroker told the Cyprus Mail yesterday that unless Frou Frou could wrangle a 100 per cent buyout, the 50.6 per cent already offered by Vladimirios Lanitis would still give the Greek bottlers majority control of the company, even though CCHBC said it planned to buy up the remaining shares.
“The big question now is whether the Greek company will be able to get its hands on the remainder of the shares,” said the stockbroker. The current number of shares in Lanitis is 250 million but it is believed the Greek company would be happy to acquire anything from the current majority stake of 50.6 per cent up to 100 per cent.
CCHBC, which is 24 percent owned by US soft drinks giant Coca Cola Co. , said it would submit a public offer through its subsidiary 3E (Cyprus) Limited, in what analysts called a small but sensible acquisition, Reuters reported later yesterday.
Despite the news about Frou Frou, CCHBC said it was still keen to acquire Lanitis. “We have an agreement with the major shareholder and we are continuing with the public offer as planned,” a CCHBC spokesman said. Analysts said that even if CCHBC’s public offer fails, this would have a minimal impact on CCHBC.
“Lanitis is a small company. In case CCHBC fails to acquire the Cypriot firm, this would be neutral for the Greek bottler’s financials,” said Alpha Finance analyst George Pavlopoulos in Athens.
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