CCA Looks To Beer For Stronger Growth Prospects

Upon the completion of UK brewer SABMiller's acquisition of Australian brewer Foster's Group, Australian soft drinks producer Coca-Cola Amatil (CCA) will be given the right to acquire Foster's spirits, non-alcoholic and pre-mix drinks businesses under the revised terms of its partnership with SABMiller. However, under these terms, CCA will be refrained from selling, distributing or manufacturing beer in Australia for at least two years. This restrictive covenant will inevitably cause a dent in CCA's near-term prospects, but we believe the company could mitigate this impact through its expanded soft drinks portfolio and improvements in its distribution reach.

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