What is interesting about this is whilst CCL.AX is at new lows, Coke in the US is at all time highs, as is Pepsi. There are obvious differences here, and we can expect some people to jump in and talk about how CCL is just a distributor etc, but the fact that KO and Pepsi are doing so well in the US suggests that the business model still does work. Sugar and sugar substitutes are doing well. In Pepsi's case they also sell Dorito's and other junk food all of which are very unhealthy.
In fact if you compare the charts of CCL and KO you can see that from about 2000 they seemed to have some correlation and it is only since mid 2013 that CCL has fallen away and KO has continued to rise.
Given the history that Alison Watkins has had trying to do a deal to have GNC bought out, and given the extremely poor performance of the CCL share price, I wonder if CCL's strategy of reducing costs and debt is a move to attract either a PE buyout or ready themselves for a takeover from another company. It is very easy to argue that there is much more value in their ubiquitous distribution model than is being currently valued by the market and perhaps a buyout or takeover is the quickest way to unlock this value.
This is all speculation of course, but when you consider the absolute lack of recent news or updates and the general unresponsiveness of management to analyst and market concerns, you would hope that they are working on something.
What are everyone's thoughts?
CCL Price at posting:
$8.42 Sentiment: Buy Disclosure: Held
