Ladies and gentlemen, thank you for standing by, and welcome to the proposed acquisition of Coca-Cola Amatil and quarter three update. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised today's conference is being recorded, and if you require any further assistance, press star zero. It's now my pleasure to hand the conference over to VP of Investor Relations, Sarah Willett. Ma'am, I hand it to you.
Thank you, and good evening in Europe and the U.S., and good morning in Australia, if you're listening in. Thank you all for joining us, and apologies for this being a Sunday and also the late timing. I'm here with Damian Gammell, our CEO, and Nik Jhangiani, our CFO. Before we begin with our opening remarks on the proposed acquisition of Coca-Cola Amatil and our Q3 trading update, I would like to remind you of our cautionary statement. This call will contain forward-looking management comments and other statements reflecting our outlook. These comments should be considered in conjunction with the cautionary language contained in the releases today, as well as the detailed cautionary statements found in reports filed to the U.K., U.S., Dutch, and Spanish authorities. A copy of this information is available on our website at www.coca-colaep.com.
We'll have prepared remarks, which will be made by Damian and Nik, and are accompanied by a slide deck. Following those remarks, we will turn the call over to your questions, and following the webcast, a full transcript will be made available as soon as possible on our website, so without further ado, I will now turn the call over to our CEO, Damian.
Thank you, Sarah. And again, from my side, a big thank you to everybody joining us this evening here in the U.K., U.S., and in the morning in Australia. And again, I'd just like to echo Sarah's comments, particularly at such short notice. But as you have seen and as you'll hear today, it's a great time for us to talk about a fantastic proposed transaction. It's a very exciting moment in the time for us at Coca-Cola European Partners, as we share with you a very special announcement. Today, we are announcing a non-binding proposal to acquire Coca-Cola Amatil, which, as many will know, is one of the largest bottlers and distributors of ready-to-drink, non-alcoholic and alcoholic beverages and coffee in the Asia-Pacific region. We've great regard for Amatil's employees and its history as a Coca-Cola bottler.
It has a long and rich heritage. As such, Amatil is a great business, and this transaction represents a unique and tremendous opportunity to combine two of the world's best bottlers. It is also a moment in time for the wider Coke system, as it represents a first, the first ever acquisition of a publicly listed Coke bottler by another listed bottler. As you can probably tell, I'm more than excited about this opportunity. But before I share more with you on this, I did want to touch on our Q3 trading statement, which we have also released this evening alongside our full year 2020 dividend declaration. At the end of the prepared remarks, there will be plenty of time for questions. So firstly, and very briefly on our third quarter performance.
We continue to demonstrate the resilience of our business and our ability to operate with agility in such a rapidly changing environment. I'm extremely proud of how our colleagues have continued to support our customers, consumers, and communities throughout this challenging time. I'm particularly pleased that we've continued to take value share year to date, according to Nielsen, both in-store and online. This is reflected in our encouraging performance over the summer months, which you can see here, resulting in a significant improvement in volumes versus second quarter, in part helped by a favorable weather. In particular, we saw a marked improvement in away-from-home volumes, reflecting the easing of lockdown measures and outlet reopenings across all markets.
Home volumes were also strong, driven by the ongoing outperformance of Fanta consumption, as well as the resolution of a recent customer negotiation, which has started to support volumes in Germany and France in particular. Revenue per unit case grew by 1%, benefiting from the improvement in away-from-home volumes, fewer promotions in the home channel, as well as favorable brand mix. Moving now to the dividend. Recognizing the importance of cash returns to shareholders and the confidence in the future of our business, we have today declared a full-year dividend per share of EUR 0.85, representing a 50% payout ratio based on current consensus expectations for diluted earnings per share. Sustainability also remains a key priority for our business, and I am pleased that we continue to make further progress.
We recently announced that the Netherlands and Norway will fully transition to 100% rPET in 2021, and Great Britain will fully transition to 50% rPET by the end of this year. A great achievement and something that remains of utmost importance to us, regardless of such a challenging backdrop, and as you know, we have a great portfolio of the world's best brands, and this is evident in the outperformance of brands such as Coca-Cola Zero Sugar, Monster, and Schweppes, all of which grew volumes during the third quarter, and finally, some brief comments on the outlook for the rest of 2020. As you will be aware, a number of restrictions and local lockdowns are being reintroduced across our markets.
All bars and restaurants in Belgium and the Netherlands have been temporarily closed, while various regional closures and local restrictions have also been imposed across our markets. Many markets have also now introduced curfews, and many outlets are operating at reduced capacity. Although this has resulted in a deterioration of total volumes versus September, it is important to note that we do not expect these restrictions to impact volumes as negatively as the second quarter. Seasonally, it's important to remember that the home channel becomes more important for us in the fourth quarter. We will continue to work with our customers to drive volumes, both in-store and online, particularly into the run-up to the very exciting and large Christmas, Christmas trading period.
So overall, a much improved quarter, and still lots to look forward to with Christmas approaching, despite, as I mentioned earlier, the continued uncertainty about the duration of the pandemic. So turning now to the main announcement of today, the proposed acquisition of Coca-Cola Amatil. This is a unique and tremendous opportunity to combine two of the world's best bottlers. Four years on from the creation of CCEP, this is the right time to take on a new growth opportunity. We have been reviewing this potential transaction for some time, and have invested significant time understanding Amatil's business and the markets in which it operates. Western Europe, of course, remains a fantastic place to be. However, it is now the right time to take our proven playbook and apply its success to these new markets.
The strategic rationale behind this proposed transaction is compelling, solidifying our position as the largest Coke bottler by revenue and creating a platform for accelerated growth and returns. We have created significant value for our shareholders, and we are eager to continue on that trajectory. So this coming together of two of the world's best bottlers is truly exciting. We would be diversifying into a very exciting part of the world. New geographic exposure to markets which, while largely developed in nature, and therefore very much like our own, do enjoy higher underlying growth fundamentals. CCEP has a proven track record of creating value in developed markets through strong revenue growth management, route to market transformation, and leading commercial capabilities. We believe this will enhance our collective business going forward.
This broader and more balanced geographic footprint will double our consumer reach and will provide the opportunity to take on one of the world's most populous emerging markets in Indonesia. A little bit more on that shortly. We expect the transaction to ultimately drive more sustainable and faster growth by combining the talent, learning, and best practices of two great companies, both with a strong shared sustainability focus. And importantly, we will be able to scale up faster than ever before, with even more ambitious growth plans with The Coca-Cola Company and our other brand partners. And of course, we are very mindful of the backdrop.
Both businesses have excellent agile teams and operating models with great digital capability, which will allow us to run this, the collective business effectively in COVID times, while building on the best of who we are as we emerge from the pandemic and into an exciting future together. Admittedly, in the context of a global pandemic, the timing could have been easier, but the pandemic, as I'm sure you've seen, has been less disruptive in Australia, New Zealand than in Europe. And we are confident that the short-term impacts on underlying fundamentals do not materially impact any long-term view. We believe in the power of the Coke system to generate value for shareholders, demonstrated by the creation of CCEP four years ago, and now by taking on these great franchises and markets. As I mentioned earlier, this transaction would solidify our position as the largest Coke bottler globally.
You can see here the combined revenue and EBITDA of both companies on a 2019 basis. Our revenue would grow by 25% from EUR 12 billion to over EUR 15 billion, operating on a similar EBITDA margin, generating nearly EUR 3 billion in EBITDA. It is a formidable and even larger player in the consumer staples space. Overall, this acquisition will solidify CCEP's ability to grow both revenue and EBITDA, invest in the business, delever, and ultimately return cash to our shareholders. As you can see here, this transaction would be bringing together two of the world's best bottlers. Both businesses having leading positions in NA RTD, in great markets with strong financials. Most of you already know us very well. Amatil would provide attractive scale into six new markets, Australia, New Zealand, Fiji, Samoa, Indonesia, and Papua New Guinea, doubling our consumer reach to around 600 million.
From a portfolio perspective, we would be adding wider capabilities in the areas of alcohol and coffee, and we would be creating a more diverse culture with even more opportunity for our people to grow. And the financials here speak for themselves. Both companies showcasing strong margins and excellent free cash flow generation. Since the formation of CCEP four years ago, our focus has been on revenue diversification through pack, channel, and brand. Four years on, this is the right time to expand the diversification strategy into new geographies. And so I'm very pleased to be adding these new markets into the CCEP family, as you can see in the slide. Approximately 75% of Amatil's revenues sit within developed markets, so similar to our current footprint, with the remainder driven by the exciting emerging market of Indonesia.
Beyond the geographic diversification, while the core category for both businesses is NA RTD, the transaction would strengthen and broaden our current portfolio, not just within that category, but in the acquisition of wider capabilities, as I mentioned, in alcohol and coffee. This is already a focus for us in Europe as we build out our coffee business led by Costa and prepare to launch Topo Chico across our markets. And like our markets, Amatil boasts the number one market share position in CSDs across its key markets. So a great portfolio and one that is clearly largely complementary with our own. Amatil's markets also provide attractive long-term macro growth prospects, with population and inflation ahead of our existing footprint. The same is true of expected GDP growth.
Indonesia's growth prospects are particularly attractive, so we are excited that this transaction provides exposure to one of the most exciting and most populous emerging markets. Here we can leverage the past experience of our senior leadership team, who have, in their Coke careers, been successful in creating value in similar environments. For example, I myself have spent some years with Amatil, and so I know these markets well, and I've worked in various other markets such as Russia, Turkey and Pakistan during my Coke system career today. Nik spent several years in a European sister bottler, Coca-Cola Hellenic, with their focus on emerging markets, alongside time spent in India and in Africa. Experience alongside many others in the CCEP leadership team that we look forward to leveraging as we move forward.
The same story from a category perspective, with NA RTD growth expected across all markets in the medium term. Indonesia is the standout here, with high growth potential, as referred to on the previous slide. Within NA RTD, Sparkling continues to grow and has proved its resilience throughout the current pandemic as consumers turn to trusted and great-tasting brands. There's also an opportunity to increase consumption levels across Amatil markets, given that they are lower than in our markets. All in all, the spectrum of opportunity from a macro and market perspective is one we're excited to grasp. Finally, we believe there are endless opportunities as we combine our talent pool and as we share learnings and best practice. A more diverse and inclusive culture will translate into new thinking and new ideas, and our people will have more opportunity to grow and develop.
We have a proven formula in our existing footprint, both in terms of integration experience as well as capabilities, which we would apply to Amatil's markets to drive improved performance. But of course, this is a two-way future, as there will be equally plenty to learn from Amatil as well. This transaction enables faster scale. We can accelerate faster together than we can individually. We can pilot across markets and scale up from this much larger platform, taking learnings as we go. Faster scale benefits in areas such as digital, technology, procurement, and sustainability, but there will be many more. We can also develop faster capability in exciting areas such as alcohol and coffee, complementing our core NA RTD space. And as I touched on earlier, we would leverage CCEP's experienced leadership in emerging markets.
Very importantly, all of this will drive even more aligned and ambitious growth plans with The Coca-Cola Company and indeed all our brand partners across Western Europe, Oceania, and Southeast Asia. We're also pleased that CCEP and Amatil share a strong focus on sustainability. As you know, CCEP's integrated sustainability plan is now underpinned by carbon reduction targets being incorporated into our long-term incentive plans, making us very much an early adopter in this space. We will do more to reduce our carbon footprint, improve our packaging, support new packaging solutions, and use less water. So going forward, this will be in tandem with Amatil, who are also leading in this space. In fact, Amatil was the first bottler globally to launch a 100% recycled PET bottle for carbonated beverages. The pandemic has strengthened our determination to go further and faster.
Amatil's shared focus will facilitate that faster journey as we collectively build a better and greener future. So now let me pass over to Nik, who will run through the proposed transaction itself. Nik?
Thank you, Damian, and welcome to all of you again. Thank you for joining us this late on a Sunday evening as we share what is truly an exciting opportunity for CCEP. Let me quickly move on to the proposed transaction itself, how we're thinking of structuring the deal, as well as talk through the next steps to get us to close. Our board of directors have made a non-binding offer to acquire all of the public shareholding of Coca-Cola Amatil, which is 69.2% of the share capital, at a price of AUD 12.75 per share in cash. Again, to be clear, this is for the independent shareholders of Amatil, other than The Coca-Cola Company.
This part of the transaction represents a premium of approximately 18.5% to the spot closing price on Thursday and a 23% to the one-week volume weighted average price. You'll also find the one-month and three-month premiums included in our release. In addition, we have entered into a heads of terms with The Coca-Cola Company, setting out the terms on which CCEP proposes to acquire The Coca-Cola Company's 13.8% interest in Amatil. As you can see, The Coca-Cola Company would receive AUD 9.57 per share in cash for the 10.8% of their shareholding, which immediately allows them to sell down to a 20% stake.
CCEP will work with The Coca-Cola Company to acquire all the remaining 20% shareholding in Amatil, preferably in cash at closing, but subject to us considering the appropriate levels of leverage we are willing to take on as we consult with the rating agencies, and I'll talk more about that in a moment. To ensure maximum flexibility for us, we have agreed to provide a put option for the remaining 20% stake to be exercisable for a three-year period, beginning on the third anniversary after the closing of the transaction. This will be at the agreed conversion ratio into CCEP shares to allow The Coca-Cola Company to increase their stake in us, assuming, of course, we have not purchased the remaining stake in cash in the interim period.
So taking all this together and assuming we are able to go ahead with a full cash acquisition for the 20% stake at the price of AUD 10.75, implies an effective purchase price per share of The Coca-Cola Company stake of AUD 10.33, and of AUD 12.01 for the proposed transaction, which is approximately an 11.7% premium to the spot closing price on Thursday. So taking the effective purchase price of AUD 12.01 results in an enterprise value of Amatil on a fully diluted basis of approximately AUD 8.7 billion or approximately EUR 5.2 billion, as you can see on this slide.
The enterprise value of AUD 10.8 billion, or approximately EUR 6.5 billion, is calculated using the most recent reported figures for net debt, non-controlling interest and other items, as well as adjusting for AASB 16, a lease accounting standard in Australia similar to that of IFRS 16. So overall, the proposal implies a multiple of 10.9 times to Amatil's full year 2019 reported underlying EBITDA, also after adjusting for AASB 16. This is an attractive multiple for such an exciting deal and in line with the multiple paid on the creation of CCEP back in 2016. Having said that, the transaction still represents a full, fair, and final price for the public shareholders of Amatil. So clearly a very attractive use of cash and a transaction that we believe will create significant value for all our stakeholders.
From a financing perspective, the transaction will be principally funded by existing liquidity and incremental borrowing, with committed financing already in place for the proposed transaction. We would plan to put a syndicated bridge in place to be taken out in the public debt market at the appropriate time. This flexibility in structuring, together with the prices agreed, collectively demonstrate The Coca-Cola Company's support for this transaction, as well as their belief in the future of CCEP. And of course, this is a further endorsement of the strong alignment we have built with The Coca-Cola Company since the formation of CCEP, one of the true partnerships. Importantly, we remain fully committed to an investment-grade rating. As a reminder, we are at the top end of the band today with a triple B plus and an A three rating with S&P and Moody's, respectively.
The combined business will continue to have a very strong and unrelenting focus on free cash flow generation and conversion, as evidenced through our strong track record over the last four years, while also maintaining our commitment on a progressive dividend policy and broader shareholder-friendly actions. Generating strong returns for our shareholders remains of utmost importance to us, and this is also demonstrated in our dividend announcement today of EUR 0.85, a 50% payout ratio on consensus full-year 2020 diluted earnings per share. We will also continue to stay focused on deleveraging and the repayment of our debt obligations. As a reminder, we have a solid balance sheet with well-balanced debt maturities that can be repaid through existing cash flows in any given year.
So in summary, we believe this is a great deal for all our shareholders, and we look forward to driving continued shareholder value alongside our partners at The Coca-Cola Company. The deal creates exciting top-line growth potential, as Damian talked about earlier, fully aligned with The Coca-Cola Company, and would be significantly earnings accretive within the first year. It is the best use of our cash and of course, is enabled by the strong balance sheet that we have that I just alluded to. So all in all, a fantastic and a unique transaction. So before I turn back to Damian to close, let me touch briefly on next steps.
The proposed transaction is subject to the satisfactory completion by CCEP of confirmatory due diligence, which is underway, the receipt of regulatory approvals, entry into a scheme implementation agreement between CCEP and Amatil, and a cooperation and sale deed with The Coca-Cola Company, all of which will set out in more detail the terms and conditions for the implementation of the proposed transaction. We're looking to complete the transaction in the first quarter of twenty twenty-one, subject to the conditions with Amatil and The Coca-Cola Company that I just described above. Of course, we will keep you updated on our progress in due course over the coming months. I'll hand back to Damian now to summarize.
Thank you, Nik. So in summary, the strategic rationale behind the proposed acquisition of Amatil is extremely compelling and is a moment in time for the Coke system, and especially a moment in time for all of us and our shareholders at CCEP. This coming together of two of the world's best bottlers is truly exciting, and I'm sure there are plenty of opportunities that lie ahead of us. The creation of CCEP four years ago generated significant value for our shareholders, and we believe this transaction will deliver the same, enhancing CCEP's profile as an attractive total investment opportunity. We truly believe this transaction represents one of the best ever in the Coke system, and honestly, we can't wait to get started. So now I'm very happy to turn the call over for your questions. Operator?
Thank you. As a reminder, if you would like to ask a question, please press Star, then one on your telephone keypad. Again, star one to come into the question queue. To withdraw a question, press the pound key. And our first question is going to come from the line of Sanjeet Aujla with Credit Suisse.
Hey, guys. Thanks for the questions. Three from me, please. Firstly, can you update us on your medium-term organic revenue growth profile, pro forma Amatil? Secondly, on cost synergies, presumably limited, but can you just talk about any numbers there? Thirdly, quite interested in your take on the alcohol category, read across here. You spoke a little bit about leveraging Amatil's experience in Australia in particular. What are your ambitions there in Europe over the medium term? Thanks.
Thanks, Sanjeet. Maybe I'll start with the last question and then let Nik cover the first two. So we are excited. I mean, we have in our Belgian business entered into a number of alcohol distribution agreements to try and learn within that category. I think it's certainly a category that we should continue to look at to see how it can complement and enhance our overall customer proposition. That's clearly something that we've seen Amatil do well. If you look at the size and scope of their alcohol business, particularly in Australia, we believe there's a lot of learning there. You know, obviously what we'd like to do is learn, understand a bit more as we go through the process, and then challenge some of our own thinking in Europe.
I mean, that's one of the beauties of this deal, is that we've got, you know, we believe, the opportunity to learn from a great leadership and management team in Amatil, who've done a lot in this space and challenge some of our thinking in Europe, so can't articulate that into a strategy yet, because that's clearly the work we wanna do as we move forward, but it's very exciting to learn. They have a great portfolio. They're in it for quite a while. It's across beer, spirits, ready to drink alcohol. Clearly, we're doing Topo Chico in Europe, so that will be another play in that space, so a lot, lot to learn and hopefully a lot to reapply to Europe, and then we'll obviously be able to put some numbers around how that application will create value for us in Europe.
So happy to hand over to Nik to answer the other couple of questions.
Sure. So I think, Sanjeet, on your first question around trying to provide some medium-
Sorry, could everybody mute? There's just a bit of background noise. Apologies.
Sanjeet, maybe you need to mute. I think you might be,
Yeah.
Okay. Hopefully, that's better. So just on your first question in relation to midterm, you know, top line guidance for the pro forma company, I would say to you, it's probably a little early to go into that until we actually close the deal. But remember, we've always talked about at a CCEP level, the you know, low single digit top line growth. Clearly, I would expect the developed markets within Amatil's territories to be able to support something in a similar nature, particularly when you look at the category growth opportunities. And then clearly, when you look at the emerging markets, we would expect that to be higher. So obviously, we will build that all in as we close the transaction and provide some more clear guidance for the year during close, but then, more importantly, how we think about that going forward.
But, you know, I think the really important point here is there is tremendous opportunity for top line growth from execution capabilities that we have demonstrated through this transaction, and we're really excited about that going forward. And a lot of cross-learnings that we can do, you know, from Amatil over to us and vice versa. So on the cost synergies piece, you know, just echoing and building on the comments that I've just said, remember, this transaction is really about pursuing inorganic top line growth through stronger execution, best practices, building on what they have learned through alcohol and coffee. You know, Damian just talked a little bit about that. Our strong focus in away from home and small packs, so lots of opportunities there. Cost synergies are gonna be a lot more limited in this transaction.
Having said that, we're excited about the work that the Amatil team has been doing on the mitigation opportunities and how they think about that going forward, and we feel comfortable with that level at the early stages of diligence. Obviously, we'll provide you more an update on that as we go forward, and then also, they've announced a Fighting Fit program that we will be assessing and provide more color on that. In addition to that, there will be cost synergies. I think it'll be too early for me to go into that at this stage. We've assessed a number of areas, but there will be other areas that we will be assessing as well and come back to you in due course. So hopefully that helps.
Yeah, I think this-
Yeah, sorry. Go ahead.
Sorry, just a very quick follow-up. You spoke quite a bit about leveraging your execution capabilities, and clearly, you've done a great job in Europe over the last few years. But where exactly do you see the biggest opportunities? Is it with pack formats? Is it channel strategy? Is it route to market? Just a bit more color on that sort of expertise you can bring into the Amatil business and where exactly you see the opportunities for growth.
Yeah, I mean, I think as we called out, I mean, this really creates a larger and more exciting growth platform. Obviously, when you include Indonesia to Nik's comments, you even get a higher outlook. But on their business and on our business, I think we both demonstrated, you know, great abilities across a number of areas, all of which you mentioned. So, you know, we certainly see this as a two-way opportunity. I think we can bring some of the work we've been doing around key account management, mix, promotional pricing. Clearly, they've done a lot of work around portfolio management and a broader portfolio. I think both of us have invested a lot in digital, so there will be a lot of synergies there, I think, that we can combine.
So I think it's gonna be across the whole range of the value chain, Sanjeet. But I think that, you know, ultimately, you know, we will probably both enter into this with a much lower cost base on the back of COVID. We've made that commitment at CCEP. You know, from what you've seen from Amatil, they've also taken a lot of mitigation action. So we are also excited about the synergies, but also entering in with a lower cost base as we look forward, and then combining that with a more exciting growth outlook. And clearly, you know, a lot of this is down to our relationship with The Coca-Cola Company. And as we've talked about this transaction, we've also, you know, challenged ourselves to set, you know, even more ambitious goal targets as we look to the future.
Thank you. And as a reminder, if you would like to ask a question, please press star then one on your telephone keypad. Again, star one to come into the question queue. Our next question comes from the line of Lauren Lieberman, Barclays.
Great, thank you. Congratulations to all of you and also to Alison and Martyn as well. It's exciting and makes so much sense. We've spent most of the day kind of working through this. So anyway, I have many questions, but the first thing I wanted to talk about maybe was channel. I thought it was really interesting that Amatil, I guess, in the last two years or so, losing track of COVID, but let's call it two years or so, had restructured to move from a regional model to focus more on channel. And I couldn't help but, in reviewing that, think about many of the things that you guys have talked about with a channel-driven approach.
So it'd be great if you could talk a little bit about maybe similarities and differences in how you've approached channel, and learnings that, you know, I know it's early, but that you think you can see, you know, from both businesses and how to go further and faster? Thanks.
Thanks, Lauren. Yeah, I mean, it is, you know, early days, and we'll learn a lot more as we enter into more dialogue with our colleagues at the right time. But, you know, just looking on a macro level, a couple of things obviously excite us. One is, you know, there is a more favorable GDP and demographic outlook, you know, even if you exclude Indonesia, which obviously sets that metric even higher. So we are seeing a more robust category outlook as we look particularly at Australia, New Zealand and Indonesia. So that on a macro level gets us excited. And then within that, obviously, Amatil has built strong leadership positions across a lot of the categories.
Clearly, the trade structure and customer structure and consumer structure is very similar in Australia and New Zealand to Western Europe. So I think the segmentation work that we've been doing, the RGM work that we've been doing, the portal, our digital online capabilities, you know, all will complement similar work that Amatil have been doing, but obviously by combining both together. And I think, you know, different backgrounds and cultures always add value to a business, right? So I think we're gonna get a whole lot of new thinking, new energy in our organization, new energy in their organization, and that will flow through to, I think, you know, even stronger commercial execution at a channel level, at a segmented level, and as we mentioned in our remarks, also at a category level.
I think their insights around alcohol, ready to drink alcohol, beer and spirits, coffee, they've been a big fan, and coffee will complement the work we're just kicking off with Costa. I think our ability to, you know, continuously drive revenue per case year on year in Europe, is something that we would like to bring to the table, and see could we, you know, work on achieving the same in Australia with our revenue growth strategy. So there is really a very exciting, I suppose, collage of opportunities that we see, and that's something we're excited about getting into dialogue with them on. And then obviously, Indonesia is truly exciting.
Honestly, I mean, if you look at the size of that market, the consumers, it's situated in a fantastic long-term growth space in Southeast Asia. I've enjoyed successful years in similar markets, as have Nik and a number of our executives. You know, while it's not currently as big as maybe we would like it to be in the future in terms of the current value, I think there's a lot of excitement there. And so looking forward to that also, so.
Yeah. Can I just build on that one? Because I think an important factor that Damian and I have talked about with the board and The Coca-Cola Company is obviously we're making a foray as CCEP into emerging markets, and that's great optionality for us going forward. Because, you know, Damian's talked about experience that we have through prior work-related experiences in emerging markets. And we truly feel that that's gonna be a tremendous opportunity. And the optionality that provides us going forward, if we can demonstrate success there, clearly opens up, hopefully, more inorganic opportunities in the future. And I think also, you know, the fact that The Coca-Cola Company continues to stay in as a JV partner with us, if you recall, they made a direct investment of about $500 million in 2014.
They will retain that, you know, and work with us as we jointly rethink about the approach there. So, you know, small amount of the transaction, a great way for us to get into an emerging market, and as I said, great optionality going forward.
I think we've seen, and you know, they've commented on it, that a lot of that investment has already gone in. So that's also important. Absolutely. So-
Yeah, and that's one of my follows is gonna be when you think about capital, where you think, let's just go, you know, Australia and Indonesia. My sense is these businesses are well invested, well funded, and so there's not a dramatic incremental CapEx need in either of them. Do you think that's a fair statement at this point?
Yeah, absolutely. That's exactly the way we're thinking as well. And I think we will get some capital synergies, particularly in the area of technology. You know, as you know, when we build that, it's deployable across more markets, so we get leverage there. And if you think about the future, you know, being clearly digital, you know, we would certainly reflect that in our CapEx estimations going forward.
Okay. That's great.
[crosstalk]
I'll pass it along. Oh, no, keep going. Great.
Yeah, sorry. Just on the Indonesia one-
Yeah.
As Damian said, there's been a lot of investment made, but remember, some of that cash that was put in continues to be available, and obviously, if it's not utilized, would be divvied up as appropriate. But clearly, the access is there to continue investing if we get the requisite returns. So thanks, Lauren.
Okay. Thank you so much.
Thank you. And our next question is going to come from the line of Fintan Ryan with JP Morgan.
Good evening, gentlemen. Thanks for the call. Thanks for the question. Just actually following on about Indonesia, points you just raised there. Looking at the Amatil Q3 performance, trading statement put out this evening as well, actually looks like Indonesia has deteriorated even more, clearly COVID cases are rising. And I know clearly it's a short-term headwind, but really, like, what do you think you can actually bring to the table in terms of actually getting performance in Indonesia to suddenly be better? Because Amatil itself has also impaired Indonesia holding over the last few, over the last period. And so, like, beyond sort of just GDP, GDP plus X, hopefully, like, what, what sort of can you bring to the table that Amatil hasn't been able to do there so far?
And actually, just on that as well, you-- I think you alluded to that you would look at further inorganic opportunities. Would that be other markets inside these days here? Or like, what-- I clearly need to get Amatil over the line first, but like, what would be the ambition, I guess, on a five-year plus view in terms of further inorganic opportunities?
Thanks, Fintan. I think to your last point, I think your comment, let's get Amatil over the line, is probably the best way to answer that question. I mean, I think there is. You know, it certainly gives optionality, you know, if you take a five- to 10-year view, you know, on our acquisition potential. But clearly, you know, that's something that, you know, will only be achievable if we do what we need to do with Amatil in the next number of years. So that's our priority. But clearly, you know, you could imagine us being extremely successful in Indonesia, and then what opportunities that may unlock in the future. But I think that's, you know, probably the next step beyond this transaction.
But obviously, it does strategically put us in a different place, and we're excited about that, although we recognize the priority for our shareholders is gonna be to create as much value as quickly as we can with this transaction. So that's gonna be our main focus. On Indonesia, I mean, again, I think a lot of good work has gone into that market. Certainly, there's been a lot of investment made. You know, we feel good that that's already happened. So, you know, we certainly believe we're getting a business that's been well invested in. Now, clearly, you know, with the Coke company, you know, we will look at, you know, how do we accelerate the work that's been done? How do we, you know, focus, you know, on obviously, growth and margins and cash?
And, you know, we're, you know, all experienced in what it's like to operate in those markets. And, and obviously, anybody who has experience in emerging markets, it's truly exciting. You've got to be very disciplined, you've got to watch your cash, but the consumer opportunity is immense. I mean, that's an amazing market. We will. You know, the business there, the system there has a strong share in Sparkling. But clearly, we've an opportunity to look at that again and also at our portfolio. So we'll take time to learn. We have some, obviously, initial views on why we think that's a fantastic part of this transaction. But that's something we'll share with you probably at a later date when we can, you know, give a bit more specifically around it.
But there's a lot there to get excited about at the moment.
Great. And just as a follow-on question, I guess the more sort of mundane, European business, given the context, but, clearly it's very simply a very strong Q3 delivery, although you mentioned that, the volumes in Q4 so far are likely to be below the September, which I think you disclosed at minus two. Just in terms of, like, the moving parts, like, how would you be able to quantify how much of sort of a sell-in benefit you got from the, the resolution of the trade dispute in France and Germany? And I guess just, clearly it is still the end of October, but, would the sort of down low to mid-single digit probably be a reasonable assumption for Q4 at this point?
So firstly, on your question in relation to the sell-in and the, you know, the magical resolution, we wouldn't go into details of quantifying that, but clearly, you know, there's a benefit in the same way we weren't able to quite quantify the exact impact in Q2. But, you know, largely, that's a positive, and as was the weather, but also just the reopening of a number of outlets. So we're very pleased with the uptick that we've seen, and this came through obviously from a much improved performance and away from home as well as the home channel. We won't guide towards Q4, and we've been very clear on that. I would say to you, as Damian has rightfully said, a couple of factors to keep in mind.
You know, this is not a large quarter for the away-from-home market. It's much more of a home market quarter anyway. And I think the way we continue to read it, in the sense that we're getting from some of the wholesalers and the retailers, is in particular, given the home market and the fatigue that people are feeling, you know, we're hoping that Christmas will continue to be very solid. Having said that, we'll be watchful, but, you know, I think if nothing else, the fact that we've gone ahead and declared a dividend today continues to lead us to have much better visibility and confidence on a midterm basis. And obviously, we've done that in line with what we've seen is the consensus numbers that you have access to on our website. So hopefully that helps.
Great. Thanks, Damian. Thanks, Nik.
Thanks, Fintan.
Our next question is going to come from the line of Bryan Spillane with Bank of America.
Hey, I guess good evening, good morning, and good afternoon, depending on where you are. I've got a couple of questions. I guess the first one, you made a mention in the prepared remarks about accretion, so I just want to make sure I understand. Is the baseline in terms of accretion just simply the mechanical math of the deal? So what your financing is, what the price is, like, you're not building in any like synergy or cost-saving expectations into accretion. That's the first question.
Yeah. So, you know, clearly, as I've indicated, if we were to be able to do an all-cash deal upfront, depending on our levels of leverage and obviously the debt environment being as favorable as it is, clearly, you know, the economics would work well and be accretive, in the first year at a quite a significant level. And, you know, any kind of cost synergies, et cetera, would really, not come right away, and as I said, are not really the basis of this transaction, so-
Right.
You know, but you're thinking about it is the right way.
Yeah. So fair to say, we're just assuming, you know, this happens, and nothing changes in terms of the Amatil trajectory at the starting point for accretion.
I mean, clearly we see that. But if you're looking at a starting point, yes, it's not like we can get in day one and suddenly make, you know, huge, tremendous change. It will take some time to get that trajectory moving in a different direction. And we'll continue to update that as we go along.
Okay. And then maybe, Nik, as a follow-up to that, just as we're all plugging in acquisition models, what's a good interest rate that we should be thinking about?
I have got really good numbers of what I would be thinking about, so hard for me to guide you on anything. But, you know, I would say to you, if you look at the market and what we have been able to realize, if you look at the recap, for instance, that we did, which actually, if you look at that effective coupon, was about 65 basis points, you know, that's a good starting point to use. Now, obviously, the size and quantum of what we're doing is significantly higher, but, you know, I would definitely say to you, versus what we see as our weighted average cost of debt today, on a pre-tax basis, we would see that in current interest rate environment being significantly better.
Okay. And then maybe a second question, and this is for both you, Damian and for Nik. You know, the history of transcontinental, you know, kind of, or pan-continental, Coca-Cola bottling franchises and their ability to deliver value to shareholders has been probably mixed. You know, I've been around long enough to remember when Amatil was a bottler in Eastern Europe. You know, since they had a difficult time in the Philippines, even CCE, the legacy, right? You know, you can argue that, you know, it got better in Europe when they had to stop worrying about North America.
So I get and you guys have been around this long enough, and you both know the history much better than I do, but just, like, why would CCEP be able to exceed with a, you know, kind of a pan-continental, across hemispheres, Coke bottling franchise where, you know, other attempts at that maybe haven't been as successful from a, for investors?
Yeah. Yeah, it's a good question, Brian, and clearly, we've reflected on that as we've, you know, looked at, you know, what we think is a fantastic transaction. I mean, I think if you look at, you know, a number of other bottlers, Swire, Hellenic, CCI, I think they've all demonstrated that they can run a lot of large geographies extremely well. I think if you go back to... Well, just after the Wall fell in Europe and Amatil came to Europe, that was a very different time, and that was mainly Eastern European markets, and it was very much a startup type of environment. I mean, clearly, what we're doing is, you know, looking at markets with very similar characteristics, language, culture, consumer, customer.
You know, there's a lot more in common between our markets and certainly Australia and New Zealand than there is different. So I think that's a big, big difference to where we are today. Also, I believe the world has changed. Technology, digital, I mean, probably most of us have been working slightly remote anyway, so I think people's ability to work across, you know, time zones has changed. You know, certainly in the Coke system, I think some of the examples, you know, you gave, I don't candidly think that the geography or distance was the deal killer.
I think if you look back, and I won't go through them, to be fair to predecessors, but I think if you go back and look at why the examples you mentioned that didn't work, I don't think any of them were due to geography. I think they were due to other issues, candidly. And the ones that are working today are not being hindered by geography. So we're very comfortable that, you know, with the talent that we hopefully will bring in with Amatil, that businesses will continue to be successful. And let's be honest, Australia, New Zealand, particularly, are great Coke markets. They have been for decades. And, you know, that's why we're excited about combining Western Europe. So we've given that a lot of thought. You know, we clearly understood that would be the question.
But as I said, there's a lot of bottlers. It has been mixed, but there's a lot of bottlers who've made their shareholders a lot of money by being bold and brave at the right time and taking on, you know, franchises. And as you know, you've been around, Brian, long enough, you don't get the opportunity to get bottling franchises in the Coke system too often.
Yeah, exactly. Yeah, the timing. You got to jump on it when the timing happens. I appreciate that, Damian and Nik. Thank you.
Thank you.
Once again, to ask a question, please press Star and one on your telephone keypad. Again, star one to queue for a question. Our next question will come from the line of Rob Ottenstein, Evercore.
Great. Thank you very much, and, my apologies if you covered this already. I'm coming onto this slightly late. You know, for those of us who don't actively follow Amatil, can you maybe give us a little bit of a sense of what their historical top-line growth has been in terms of volume, price, mix, and operating profit, and what is the kind of like the most representative or fair, best years to look at? Would it be, you know, three years prior to 2019 or five years? Just trying to get a sense of, you know, how the business is done on a way that fairly reflects the business. That would be my first question. Thank you.
Sure. I'll give, I'll give you some sense of that, but obviously, I think we can help you deep dive a little bit more into some of the history. I think starting with Australia, you know, I would say to you, if you looked at the years 2014 through 2016, you know, were probably some of the solid years that Amatil was continuing to experience strong growth in that market. Then I think they continued to look at several restructuring opportunities and several investment opportunities, particularly with feet on the street and looking at that whole channel strategy that Damian was referring to, where we still see a lot more opportunity.
I think that's kind of been evident in what you've seen in their second half results of two thousand and nineteen, and in some ways, what's supporting probably a better, you know, top-line growth even through the pandemic. I think, you know, you can look at some different metrics there, but clearly, top line has been the right way with those periods that I mentioned.
New Zealand has just been an outstanding performance, you know, through the years, and also evident, like, as you even look through 2019 and even 2020, I mean, even their third quarter performance has just been outstanding, when you look at it, and particularly in the way they've managed the crisis. A little more of a challenge in Indonesia, and I think that's where, you know, Damian and I have talked a lot about that optionality and that ability to kind of come in and rebase that and relook at a growth plan with The Coca-Cola Company broadly across every area, from portfolio, to route to market, to channel structures, trade structures, et cetera. So a lot more to come there.
So I wouldn't really be able to point you to something that is a good period to look at. And then Papua New Guinea, interestingly enough, there's also been a very strong business performance and a very strong cash generator as well. So that's just a quick run through, rather, just to give you some sense, and happy to pick up on more of that as we go through in the next weeks.
Great. That's very helpful. And again, apologies if you went through it, but once the transaction is done, can you give us your sense of what the pro forma amount of gross debt will be and what the leverage will be, please?
So I can't give you that right now because it all depends on how we structure it. So if you might recall, as I said in the opening comments, our preference would be to do an all-debt finance transaction, including buying out the balance 20% stake of The Coca-Cola Company. Having said that, we would probably be working through a re-rating process with the rating agencies. We want to manage the appropriate levels of debt. So, you know, we will give you some more indications of that as we go through the next weeks and how we're thinking about the debt structure, how we might think about that over the next three years, how we might think about the issuance of equity in line with the put option that we have granted to The Coca-Cola Company.
So a lot of things still moving there. What I would say to you is we're committed to an investment grade rating, and we will continue to maximize our borrowings to be able to, you know, obviously do what's right for all our shareholders. So more to come on that, Robert.
So just, I just want to make sure I'm clear on this. The limiting factor then, in terms of how much debt you're going to raise, is what the rating agencies will let you raise in terms of investment grade. Is that the way to think about it?
Yeah, we want to maintain our-
[crosstalk]
No, we'd want to maintain our investment grade, and we'd want to look at the leverage levels that we'd be comfortable with as well. We'd want to look at our deleveraging path with the free cash flow generation that we believe this business will bring through, which will be strong. We want to look at that, and balance is continuing to be shareholder friendly in terms of our progressive dividend policy. So I think all that comes into effect as we think about the right debt structures going forward.
And then just finally, do you have a sense of what the combined CapEx would likely be?
No, too early to tell you that, but I would say to you, as Damian said, we truly believe that these businesses are very well invested in. And I think as we have continued to look through the pandemic as well, there will be, you know, some opportunities to rationalize some of our CapEx investments going forward, but importantly, also leverage on some combined spend, particularly in areas such as technology, maybe even equipment and line purchases with, vendors, et cetera. So there'll be probably some synergies there, but too early to give you a number on that. And I think we'll provide you more color on how we think about the growth algorithm, how we think about the cash flow generation, CapEx investments, dividend policy, et cetera, as we get closer to closing the transaction.
Terrific. Very exciting. Thank you.
Thank you.
Thank you. Our next question is going to come from the line of Carlos Laboy with HSBC.
Yes. Hello, everyone. Maybe you can help us understand Australia a little bit better. It looks like that business hadn't grown revenues in about seven years, until last year, and EBIT was still down last year. What, what can you do differently to secure sustainable growth that they weren't doing, and maybe you can speak to some of the work that can be done there on digital platforms.
Hi, Carlos. Yeah, I think, you know, if you look at what they've talked about in their announcement today, they're also seeing, obviously with COVID being a factor, a brighter outlook as well. I think as Nik mentioned, their New Zealand business has been a stellar performer. In some ways, it reminds me a little bit of the timing around when we created CCEP. We, you know, with Western Europe, with a few years, if not more of no growth. I think the playbook that we've talked about, coupled with the work that's already been done by Amatil in the last couple of years to, in some ways, reset that market. You know, they've put more feet in the streets. They've talked about a more focused alignment with the Coke company.
You know, we believe that will start to pay dividends, and we can add to that trajectory. Quite a similar story to as we talked about four years ago. I think on the digital side, you know, we've obviously along with them got a great customer portal where we're looking at B2C direct as well, so we can bring that to the table. We certainly have got a great global Salesforce, our common platform for all our sales reps. Right across the value chain, I think there's areas that we can, you know, we can bring together, and I would say, you know, the timing for us is important.
You know, we've seen what they've put in place. It's starting to pay out, and we believe we can accelerate that as we join forces with Amatil going forward.
Thank you. And is there any insight you can give us on the ROIC WACC spread you think maybe you can get out of Indonesia, given the challenges in emerging markets?
Sorry, Carlos, was that the ROIC?
The ROIC to WACC spread that you think you can get out of Indonesia.
Yeah. I think we're working through with The Coca-Cola Company jointly, relooking at plans and how we want to think about the next, you know, three to five years. So I think we'll provide you more color on that in the upcoming months. So early days.
Thank you.
Thanks, Carlos.
Our final question for today will come from the line of Charlie Higgs, Redburn.
Hi, Damian. Nik, thanks for the question. Just one on timing for this. I know it's not talking about the fact that it's 11:00 P.M. on a Sunday evening in the U.K. But when in the midst of COVID-19, and with deposit return schemes coming in Europe and potentially in Australia, sugar tax has been on the radar for a few years now. I just wondering if you could talk about the timing now and the support from Coca-Cola and that, and also how you plan on, you know, mitigating potentially some of this management stretch that you might have. Thanks.
Yeah. I suppose, Charlie, anytime you get the opportunity to go and manage another business like Amatil is a great time. Even if some of the, you know, external factors like COVID will bring its own challenges in the near term, we think on a, you know, long-term shareholder value creation perspective, and particularly if I refer back to the details of the proposed deal that Nik laid out, and the value for our shareholders, you know, we think it is, you know, obviously a good time. I don't really see a management stretch issue. I think they've got great people. So I think, you know, with this transaction, we bring in a diverse culture and people who know the business and know the system. So I don't see a stretch issue.
For sure, if I look back over the last four years, and I can even go back to conversations when we created CCEP, we got the same questions, like: Why do it now? You've got sugar tax coming into Europe, you've got Brexit, which is still with us, we know. So I think all of those factors, and DRS we see as a positive, so I would never kind of put that in the same category. While there may be some short-term disruption in a quarter or half year, you know, we believe DRS will be good for the category and good for our business. And actually, in Australia, they're near completing a DRS rollout. So, and we'll also, you know, look at sugar tax.
You know, their business is moving much more to sugar-free, just like ours has, so there's more learning there. So I think all of those factors we're very confident of, but, you know, ultimately, you know, we feel more than capable to manage them. I think Amatil are managing them anyway, we can enhance that, and ultimately, you know, if you look at the proposed price for our shareholders of this deal, you know, which along with our growth objectives, and I come back to, I'm excited about the core space. When I look at the core space, I still get excited that we can do more work there. You know, we think the timing is great. You know, we've been looking at it for a while.
None of us predicted COVID, but clearly we managed through that and focused on the medium to long term, and that's what excites us.
Thank you very much.
Thank you. I will now turn today's conference over to Damian Gammell for closing comments.
So again, from our side, a big thank you for joining us at such short notice. But I think if there's ever a good reason to join a call on a Sunday at short notice, this is it. I mean, we're truly excited about it. You know, we believe it's great for our people, and I say that also in terms of the people at Amatil. We believe it'll be great for our customers and our consumers long term. We can create more value for our customers as well. It's clearly, we believe, a great milestone for the system, and gives us, you know, a great platform to continue to leverage a great relationship with our franchise partners, but obviously, particularly with Coca-Cola. You know, we are excited.
We truly see this as a deal that will unlock long-term sustainable value for all our shareholders, and we look forward to sharing more with you as we learn more and firm up our plans on making this a reality, and really starting to deliver even more great value for all our shareholders, so thank you, and enjoy the rest of your Sunday night, if you've got a little bit left, or your Sunday afternoon, or your Monday. Thank you very much.
Thank you for participating in today's conference call. We do appreciate your participation. You may now disconnect.