According to a recent report, Philippines brewer San Miguel Corp. (SMC) could be regretting that it cancelled the sale of its 21.5% stake in Coca-Cola Amatil Ltd (CCA) a short while ago. SMC backed ou…
According to a recent report, Philippines brewer San Miguel Corp. (SMC) could be regretting that it cancelled the sale of its 21.5% stake in Coca-Cola Amatil Ltd (CCA) a short while ago. SMC backed out of the sale when institutions said they would pay only A$ 5 a share. Recently, A$ 5 a share looked an attractive offer as CCA shares fell to A$ 4.58, their lowest level for more than a year before recovering to close 20 cents down at A$ 4.64. The falls were sustained in heavy turnover of 2.2 million shares, about four times CCA“s average daily volume. Several brokers attributed the losses to principal selling by brokers Warburg Dillon Read and ABN Amro, which were believed to have bought shares during the San Miguel sale process. Warburg and Amro, who were joint managers of the sale, were said to have been active in the market for CCA shares in the days before the bookbuild commenced. Brokers believed the two were buying on their own account, because institutions were unlikely to have been interested in buying on the market at those levels ahead of the global offering of San Miguel“s 219 million CCA shares. “To come out selling is certainly well down the track, but maybe they were waiting for the price to improve,” one broker said. “They would have been holding on for quite some time and maybe they took the view that the CCA share price wasn“t going to improve,” said another broker. CCA shares were trading on market at around A$ 5.28 when San Miguel pulled out of the sale, saying the share price did not reflect its views on the inherent long-term value of the company. Other theories for CCA“s share price fall included index selling by funds following the Telstra 2 float, and overseas funds dumping Australian food stocks in favour of those from Asia. CCA shares strengthened for a while after the cancelled sale, but started losing ground last month following profit downgrades triggered by disappointing third quarter trading in the Philippines. Analysts are now waiting to see how the Philippines fares in the fourth quarter, but are encouraged by trading in Australia and Indonesia.