Coca-Cola Buying Into Australian Food Company

ATLANTA (AP) _ The Coca-Cola Co., pursuing a strategy of joint ventures with overseas corporations, said Friday it plans to acquire at least 41 percent of the Australian food and tobacco giant AMATIL Ltd.

Coke said it expects to pay $328 million for its stake in AMATIL, which had revenue last year of about $1.7 billion.

The acquisition is part of a proposed restructuring of AMATIL, in which the Australian company plans to concentrate on its soft drink and snack food business and spin off its tobacco interests into a new company.

The deal has been approved by the boards of Coke, AMATIL and B.A.T. Industries, which is AMATIL’s largest shareholder, and is subject to the approval of AMATIL shareholders and Australian regulatory authorities.

AMATIL is one of the largest Coca-Cola bottlers in the world and one of Australia’s largest companies.

Beginning in 1981, Coca-Cola began aligning itself with bottlers and other companies in foreign countries in an effort to expand business in the growing international soft drink market, said Coke spokesman Randy Donaldson.

Coke’s major overseas ventures have been in the Philippines, United Kingdom, Taiwan, Thailand, Canada and the Netherlands.

Coke’s latest earnings report, for the quarter ended March 31, showed continuing growth in the company’s international business, with retail case sales up 8 percent and shipments of concentrate and syrup up 6 percent over the same period a year earlier.

Donaldson said 75 percent of Coke’s operating income comes from overseas.

Soft drink industry analysts said the proposed AMATIL deal was a good move for Coke.

AMATIL ″is a powerhouse operation, really first class,″ said Emanuel Goldman, an industry analyst with PaineWebber Inc. in San Francisco. ″Australia is a dynamite market for Coca-Cola.″

Goldman said the overseas market for colas is soaring, and the AMATIL venture is consistent with Coke’s international strategy in the 1980s. He said it probably would not be the last of such deals for Atlanta-based Coke.

Goldman said AMATIL is a leader in the Australian snack foods industry and Coca-Cola likely would play a minor role in the day-to-day operation of the company.

Lawrence Adelman, an analyst with Dean Witter Reynolds in New York, said Australia is a ″pretty good market″ for Coke, with per capita consumption of 195 eight-ounce bottles a year. U.S. consumption of Coke is 42 gallons per person per year, Donaldson said.

With AMATIL focusing on its soft drink and food business under the restructuring, there is potential for growth, Adelman said. Already, he said, ″they account for the bulk of Coca-Cola’s operations in Australia.″

Goldman said Coke’s expansion overseas could have the ironic effect of benefiting its competitors, namely chief rival Pepsi Cola, by paving the way for increased cola consumption around the world.

″Pepsi would be in a good position to benefit from the growth of soft drinks overseas,″ he said. ″Coke doing well will be good for Pepsi, because more people will be drinking colas.″

Donaldson said, however, that Coca-Cola competes with more than just Pepsi overseas. In Germany, for example, the soft drink maker is up against the popularity of beer, and in Italy Coke is trying to win the hearts and taste buds of wine lovers.

″We position our international competition as a battle for the share of stomachs,″ he said.