Britvic, the UK-based soft drinks manufacturer, has agreed to a £3.3 billion takeover offer from Danish brewing company Carlsberg. The deal, which values Britvic at an enterprise value of £4.1 billion, is a blow to the London market as another high-quality company goes private.
Britvic shares were 5% higher at the time of writing.
Under the terms of the agreement, Britvic shareholders will receive 1,315 pence per share, comprising 1,290 pence in cash and a special dividend of 25 pence. This offer represents a substantial 36% premium to Britvic’s closing share price on 19 June 2024, the day before takeover speculation began to circulate.
The company, known for brands such as Robinsons, Fruit Shoot, and Tango, as well as being PepsiCo’s bottling partner in the UK, will form a key part of Carlsberg’s strategy to create an integrated beverage company in the UK, to be named Carlsberg Britvic.
“Carlsberg has prevailed in its pursuit of soft drinks firm Britvic, further thinning the ranks of the UK market and depriving investors of an opportunity to buy a company and stock which has enjoyed steady success since its 2005 IPO,” said Russ Mould, investment director at AJ Bell.
“The writing was on the wall for Britvic as an independent entity when it emerged Carlsberg had secured a waiver on a change of ownership clause associated with a bottling contract Britvic enjoys with PepsiCo. Carlsberg wouldn’t have gone to the trouble of getting this detail if it wasn’t serious about getting the deal across the line.
“It probably isn’t the best price tag in the world for Britvic – only around 3% more in headline terms than a second bid which Britvic rebuffed on the grounds it was being significantly undervalued – but it is a fairly weighty premium to the undisturbed share price. It also includes the helpful kicker of a 25p special dividend to be paid before the transaction goes through.”
Britvic’s operations are expected to benefit from synergies with Carlsberg’s existing business. Carlsberg has identified potential annual cost savings and efficiency improvements of around £100 million, to be realised over five years following the acquisition. These savings are anticipated to come from areas such as procurement, supply chain optimisation, and administrative overheads.
Britvic’s presence in other markets is also set to be maintained and potentially enhanced. Carlsberg has stated its intention to retain Britvic Ireland on an as-is basis, while seeing potential for Britvic’s Teisseire business to benefit from Carlsberg’s strong presence in the French market.