Soft drink giant agrees to £3.3bn takeover deal

Carlsberg is set to take over Britvic in a £3.3bn deal, after the soft drinks giant rejected two previous bids.

The Danish brewer is offering 1,290 pence per share for Britvic, with a dividend that gives shareholders 1,315 pence per share, as it looks to build on Britvic’s presence in Great Britain, Western Europe and Brazil.

Britvic had received a second proposal from Carlsberg for the whole business on June 11 valuing the company at 1,250 pence per share, or £3.1bn. But Britvic said the approach “significantly undervalues Britvic, and its current and future prospects” and rejected the bid.

It followed a previously rejected offer from Carlsberg received a week earlier offering 1,200 pence per Britvic share.

The Robinsons and Tango maker has its headquarters in Hemel Hampstead but comes from roots in Somerset and has factories in Rugby, London and Leeds, as well as offices in Tamworth and Solihull.

A deal was already struck with PepsiCo to waive a change-of-control clause as part of its long-term bottling agreement with Britvic, removing a potential block to the acquisition.

A single integrated beverage company will be created through the deal and known as Carlsberg Britvic. It will be led by a management team comprised of individuals from Carsberg, Britvic and CMBC and take advantage of the “highly synergistic relationship between beer and soft drinks”.

The group plans to focus on areas of procurement, production, warehousing and distribution to “increase efficiency and better serve customer needs”. Carlsberg’s portfolio of soft drinks currently accounts for 16% of total Carlsberg Group volumes and 27% of volumes in Western Europe.

Ian Durant, Non-Executive Chair of Britvic, said: “Britvic is an outstanding business with a strong heritage built on its portfolio of family-favourite brands, long-standing customer relationships, a well-invested supply chain infrastructure and a fantastic team of people across multiple markets. All these factors have supported a consistent track record of delivery for Britvic’s stakeholders over a sustained period of time.

“The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors. Crucially, to remain competitive at a time when the market is being shaped by the trend of increasing consolidation among bottling partners, Carlsberg’s agreement with PepsiCo provides the combined group with a strong platform for continued success.

“The Board of Directors believe that the strategic merits of this offer are compelling, and the offer also provides shareholders with the opportunity to receive the certainty of cash consideration that reflects the current strength and medium-term prospects of the Britvic business. It also recognises the challenges of achieving an appropriate future rating and valuation for Britvic versus its historical range of trading multiples, alongside less certain long-term alignment with regard to its PepsiCo bottling business. Therefore, the Board is unanimously recommending the offer to our shareholders.”

Jacob Aarup-Andersen, CEO of Carlsberg said: “With this transaction, we are combining Britvic’s high-quality soft drinks portfolio with Carlsberg’s strong beer portfolio and route-to-market capabilities, creating an enhanced proposition across the UK and markets in Western Europe. The proposed transaction is attractive for shareholders of Carlsberg, supporting our growth ambitions and being immediately earnings accretive and value accretive in year three. We are excited about expanding our global partnership with PepsiCo and believe that the longer-term opportunities will be very beneficial for both companies.

“We are pleased that the Britvic Board is unanimously recommending our offer to Britvic Shareholders. We look forward to welcoming Britvic’s employees into the Carlsberg family and creating an exciting, combined company for all employees. We are committed to accelerating commercial and supply chain investments in Britvic, and we are confident that Carlsberg Britvic will become the preferred multi-beverage supplier to customers in the UK with a comprehensive portfolio of market-leading brands.”

Silviu Popovici, CEO of PepsiCo Europe said: “We are looking forward to building on our long-standing and successful partnerships with both Carlsberg and Britvic. We believe that the combination of Carlsberg and Britvic will create even stronger sales and distribution capabilities for our winning brands in important markets. We look forward to continuing to expand the partnership into further important markets in the future.”