UPDATE 1-Australia's Lion Nathan abandons CC-Amatil bid

MELBOURNE, Feb 9 - Australasian brewer Lion Nathan Ltd <LNN.AX> has abandoned its around A$7.3 billion ($4.9 billion) bid for soft drinks maker Coca-Cola Amatil Ltd <CCL.AX> after talks between major shareholders in the two companies broke down.

A takeover of Amatil would have given Lion Nathan a 60 percent share of Australia's A$10.3 billion soft drinks market as well as a business in canned fruits and vegetables.

Lion Nathan, 46 percent owned by Japan's Kirin Brewing Co <2503.T>, launched the cash and scrip bid in November, though Coca-Cola Amatil said at the time it had material weaknesses and looked cheap compared to other recent deals.

A condition of the bid from Australia's No. 2 brewer was that The Coca-Cola Co <KO.N> (TCCC), Coca-Cola Amatil's 30 percent shareholder and supplier, supported the proposal. Lion Nathan said in a weekend statement it was surprised that TCCC, which holds 30 percent of Amatil, had stopped talks and had not meaningfully engaged with Lion Nathan's cash and scrip proposal.

"It is very disappointing that the CCA board considered themselves unable to engage in an attempt to give its shareholders the chance to consider our proposal," Lion Nathan Chief Executive Rob Murray said in a statement emailed to Reuters.

"We made a very attractive offer at a 30 percent premium in one of the most challenging financial markets in decades. We are surprised TCCC have terminated discussions," he said.

Amatil said last week TCCC had provided Kirin with a list of conditions that would need to be satisfied.

The Australian Financial Review reported on Monday Kirin had rejected requests from TCCC for asset sales.

Coca-Cola had sought to buy Kirin's Berri juice business in Australia and to buy Amatil's Mount Franklin bottled water business in Australia among its conditions for supporting the Lion Nathan bid, the paper said.

Kirin is a competitor to Amatil in Australia through the Berri brand, and also owns flavoured milk producers National Foods and Dairy Farmers.

Amatil said last week that based on Feb 3 closing prices the bid had an implied value of A$9.99 per Coca-Cola Amatil share, representing a multiple of 10.5 times the company's 2008 consensus earnings before interest, tax, depreciation and amortisation.

Coca-Cola Amatil shares last traded at A$9.35 and Lion Nathan stock at A$8.18.

Shares in Lion Nathan were untraded in New Zealand, having closed at NZ$10.00 on Thursday.