Melbourne, Feb 9 - Australasian brewer Lion Nathan Ltd dropped a $4.9 billion bid for soft drinks maker Coca-Cola Amatil Ltd after talks between top shareholders in the two companies broke down over conditions.
A takeover of Amatil, whose main shareholder is The Coca-Cola Co (TCCC), would have given Lion Nathan, Australia's No.2 brewer, 60 percent of the country's $6.9 billion soft drinks market as well as a business in canned fruit and vegetables.
Coca-Cola Amatil shares fell more than 11 percent, while Lion Nathan, 46 percent-owned by Japan's Kirin Holdings, rose more than 4 percent.
"It's good news in terms of removing a bit of uncertainty, especially with the worry that Lion Nathan would have to offer a higher bid. Longer term, I'm a bit disappointed that the deal hasn't gone ahead," said Theo Maas, partner at Fortis Investment Partners, which holds Lion Nathan shares.
"It offered the opportunity to build a powerhouse in terms of Australian beverages, combining probably the most successful beer company and the most successful soft drink company in Australia."
Lion Nathan said it was surprised that TCCC, which holds 30 percent of Amatil, had stopped talks and not meaningfully engaged with Lion Nathan's cash and stock proposal.
TCCC's support had been a condition of the bid.
"We made a very attractive offer at a 30 percent premium in one of the most challenging financial markets in decades. We are surprised TCCC have terminated discussions," said Lion Nathan CEO Rob Murray.
The deal's collapse is the latest against a backdrop of battered financial markets that has wiped millions of dollars off companies' market values.
Global miner BHP Billiton abandoned a hostile bid for rival Rio Tinto in November and merger talks between Qantas Airways Ltd and British Airways were scrapped late last year.
Lion Nathan launched its bid in November, though Coca-Cola Amatil said at the time it had material weaknesses and looked cheap compared to other recent deals.
By 0500 GMT, Coca-Cola Amatil shares were down 11.2 percent, while while Lion Nathan was up 1.8 percent. The main share index was up 1.1 percent.
LIST OF CONDITIONS
Amatil said last week that TCCC had provided Kirin, Japan's second-largest brewery, with a list of conditions that would need to be satisfied to gain its support.
The Australian Financial Review reported on Monday Kirin had rejected requests from TCCC for asset sales.
Coca-Cola had sought to buy Kirin's Berri juice business in Australia and Amatil's Mount Franklin bottled water business there in return for supporting Lion Nathan's bid, the paper said.
Kirin and other Japanese brewers have been aggressively acquiring businesses in Australia and elsewhere, seeking growth overseas as their home market shrinks.
Kirin Investor Relations Manager Makoto Ando declined to comment on the negotiations, citing a confidential agreement between the parties.
"We will not loosen our efforts for acquisitions and alliances. We are considering various options in Asia," Ando said.
Kirin is a competitor to Amatil in Australia through its Berri brand. It acquired Australian dairy and juice firm National Foods for $1 billion in 2007 and the country's top milk manufacturer Dairy Farmers for about $470 million last year.
It said last month it plans to buy 43 percent of the beer unit of Philippine conglomerate San Miguel Corp.
Shareholder Maas said Lion Nathan's options were limited.
"I don't expect Lion will be looking for big acquisitions. There's nothing really big left in the (Australian) market, except for Foster's, and Foster's and Lion Nathan pretty much control the local beer market so that deal would never be approved by competition regulators," he said.
Amatil said last week that based on Feb. 3 closing prices, Lion Nathan's bid had an implied value of A$9.99 per Coca-Cola Amatil share, representing a 10.5 times earnings multiple.
Kirin shares fell 1.3 percent on Monday, underperforming a 1 percent gain on the benchmark Nikkei average.