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26/10/14
22:02
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Originally posted by Andy1000
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I am not saying that they will pay double, I am saying that selling the asset could just as easily be a good move as it could a bad move. Until we get details, all we are doing is speculating based on very little information.
Are you sure that CCL is not allowed to compete in the US? Is this specifically stipulated in a contract that has been made publicly available? I haven't seen anything regarding this and would be interested to read it. Certainly if there are restrictions being placed on CCL, then this is a factor to consider. Are there similar agreements in place that don't allow TCCC to sell other Coke products here? I would assume this is a reciprocal agreement. Who wins out of this? Definitely CCL as they don't have to compete directly against the mammoth TCCC. Can you imagine the beverages market here if TCCC was also active?
Remember that the parent is the largest shareholder in CCL. They own the global rights to the Coke brand. This is still the major driver for earnings for CCL. Whilst it is not ideal, I think there needs to be some consideration given to the situation. Without TCCC, CCL would be nothing. CCL is a small franchise on the other side of the world in a tiny, tiny market. TCCC's market cap is about $180bn vs CCL which is $6.7bn. TCCC is just a lazy 26x bigger. These are simple basic figures available to everyone and in a democratic system of voting, TCCC hold a significant block of voting power in CCL. TCCC could buy CCL right now with cash they have in the bank and still have money left over.
I think that rather than constantly question the relationship with TCCC, which has been the standard line for as long as I can remember, certainly as far back as 2000 anyway, even as the stock rose from around $3.50 to over $16 (+450% not including all the dividends), people need to see that this is generally a good business, as is the relationship. There will be times that are good and times that are bad. We can try to conjure up scenarios that are interesting/sinister/strategic but I sincerely think it's just a regular boring old business that just plugs away in the background.
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You make good points about the relationship but who is looking after the small shareholders interests if the major shareholder can dictate too much on a whole range of agreements & the possible sale of Mount Franklin after monopolising most of Australia's Aquifers while having the semblance of an Australian AMATIL link?