Coca-Cola Amatil shares have posted their biggest gains in five years after the bottler unveiled plans to sell almost 30 per cent of its Indonesian business to The Coca-Cola Co for $US500 million and forecast a return to profit growth in 2015.
The Coca-Cola Co will invest $US500 million ($570 million) in Indonesia in return for a 29.4 per cent equity stake in Coca-Cola Amatil’s Indonesian business.
Coca-Cola Amatil announced the heads of agreement with The Coca-Cola Co on Thursday as managing director Alison Watkins released the outcome of a wide-ranging strategic review aimed at cutting costs and restoring sales and earnings growth while building a closer relationship with TCCC, its major shareholder and franchisor.
Ms Watkins said CCA’s profits, which have fallen for two years, were expected to return to growth in 2015.
CCA is aiming to achieve mid-single digit growth in earnings per share over the next few years and wants to pay out about 80 per cent of earnings in dividends while spending about $310 million a year in capex.
This is well below the low-double-digit profit growth achieved in eight of the last 12 years at CCA.
However, the market responded well to the news, driving up Coca-Cola Amatil’s shares by as much as 6.6 per cent to $9.25, the biggest jump since April 2010.
Ms Watkins’s guidance was in line with current market forecasts. Analysts are forecasting a 22 per cent drop in net profit this calendar year to $391 million and a 4.3 per cent rise in profit in 2015 to $408 million.
Ms Watkins also announced a flatter management structure at CCA and detailed plans to cut costs by $100 million within three years, with the savings to be reinvested in brand building and revenue management initiatives.
“We are confident that the combination of revenue and cost initiatives we have under way will restore the business to growth,” Ms Watkins said.
CCA has established a new revenue management team in its key Australian business and has flagged significant changes to its strategy, moving away from a focus on volumes and price-led revenue growth to a focus on transaction growth and revenue growth through a better mix of products and prices.
Excerpt from orignal article By Sue Mitchell – smh.com.au
The Indonesia-Singapore Bilateral Investment Treaty Comes into Effect
Through the upgraded DTAA, the tax rate on branch profits was reduced from 15 to 10 percent, and the tax rate on royalties for copyrighted works of literature, arts, and film, and eight percent for the use of industrial, scientific, or commercial equipment was lowered from 15 to 10 percent.
Will South-east Asia’s tech giants turn to SPACs to boost post-pandemic growth?
– SPACs have become a hot-button topic in global finance
– The vehicle is widely used to help tech start-ups go public
– Both Singapore’s and Indonesia’s exchanges are set to allow SPACs
– Several South-east Asian tech unicorns may use SPACs to list publicly
South-east Asia is seeing a wave of interest in special purpose acquisition companies, or SPACs, with various major tech players considering them as a means to fast-track public listings. In parallel to this, several exchanges in the region are moving to allow SPAC listings, with a view to boosting post-coronavirus growth.
SPACs are shell companies set up by investors and then listed on a given stock exchange. Their sole function is to acquire a private company, enabling it to go public without having to go through a traditional initial public offering (IPO).
A SPAC does nothing beyond its essential function – it neither produces nor sells anything, and a SPAC’s only assets are the funds raised from its own IPO.
Crucially, people who buy into a SPAC do not know what its eventual acquisition target or targets will be. This is why SPACs are often referred to as “blank cheque companies”: they give the founders a free rein to back their choice of private company. A key feature of SPACs is that they are often headed by big-name business executives or fund managers, who trade on past successes to inspire trust in investors.
While they are far from a novel phenomenon, SPACs have become a hot button topic in recent times: SPAC initial offerings quadrupled last year, with the vehicles raising a record $80bn.
Merging with a SPAC enables a company to go public and raise capital more quickly and painlessly than with a traditional IPO, circumventing some of the volatility that Covid-19 unleashed on global markets. At the same time, they function rather like venture capital, helping investors to buy into high-growth start-ups on the ground floor.
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