Outlook: Bottled drinks

Outlook: Bottled drinks

BOTTLING FIZZY drinks on behalf of the world's largest consumer brand may seem like money for old rope but Coca-Cola Beverages has been making rather hard work of it so far. After coming to the London market a year ago at a hiccup-inducing 160p per share, the company ran into a series of brick walls almost immediately. A combination of stock market wobbles and the Russian crisis, which hit the new company's main markets, pushed the shares to a fraction of their issue price. Investors were left turning more to the Alka-Seltzer than the group's main product.

Sadly, yesterday's merger with the hitherto unheard of Hellenic Bottling Company of Greece will not make them feel much better. On the plus side the deal is actually a reverse takeover, with the UK company's management emerging in charge even though shareholders in the British company will end up with only 44 per cent of the shares. There is also the promise of synergies, as the combined group would control Coke bottling across Eastern Europe from Russia to the Czech Republic.

But the list of negatives is rather longer. First the group loses its London listing to be quoted only in Greece. Secondly the terms of the deal look poor. The share swap offer values the CCB shares at a supposed 180p, but the partial cash alternative is only 150p per share. The company's advisers were at a loss to explain this differential yesterday. The alternative values the company at below its issue price.

The real winner of this deal looks to be good old Coca-Cola in Atlanta, which owns 51 per cent of CCB. Analysts reckon it is the Coke giant that has pushed for this deal, keen as it is to encourage consolidation among its bottlers. The company has also been fighting suggestions at home that it should consolidate the UK company's figures in its accounts, rather than treat it as an associate. Given CCB made a pounds 21m loss last year, you can see why this is an unpalatable prospect.

The benefits for punters who subscribed to last year's much hyped float are less clear. They either take a weedy cash alternative, or end up as minority shareholders in an Athens-quoted company which will require a subscription to the Piraeus Times to keep up with. The cost savings from possible plant rationalisation and head office costs, have also not been detailed.

Word is that the announcement of this deal had to be rushed out be