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.

ITM Power shares jumped on Monday after the green hydrogen electrolyser manufacturer said it has secured future manufacturing contracts in a new deal.

In a short statement providing little in the way of detail, ITM has announced the signing of a 500MW capacity reservation with a global industrial client, ensuring future production capacity for the manufacture of the company’s cutting-edge green hydrogen electrolyser stacks.

The contract extends to the close of the 2028 calendar year and ITM Power anticipates orders in Europe and the United States.

At present, both parties have agreed to withhold additional contract details.

“Today’s announcement is a great example of how close collaboration will unlock competitive and successful green hydrogen projects,” said Dennis Schulz, CEO ITM.

“Following the already announced capacity reservation for 100MW from Shell, this agreement with yet another large-scale industrial customer is a validation of our technology and credibility to deliver.”

being declared by Aptitude Software (LON:APTD) – it should be positive and help to point investors to the company’s potential upside.

This company last reported an annual recurring revenue of 71.5%, with 55% of its sales in the UK and 45% from the rest of the world.

The Business

Investors with good memories may well remember this company under its original name of Microgen, which floated way back in 1983.

It changed its name to Aptitude Software in 2019.

It provides software solutions that deliver fully autonomous finance to enable its clients to drive growth, efficiency and sustainability.

Fynapse, which is Aptitude’s intelligent finance data management and accounting platform, is designed to increase productivity and lower costs for finance teams globally. 

This platform provides a single view of finance and business data, unparalleled performance and automation, faster and better insights, user-friendly functionality and market-leading total cost of ownership.

AGM Statement

Chairman Ivan Martin commented that the group’s performance for 2024 will be in line with expectations.

While also noting that ongoing organisational change is delivering positive progress across all functions, accelerating Fynapse readiness and delivery, underpinned by the platform’s strategic partnerships.

Its pipeline is continuing to grow with key opportunities, including new prospects and the migration of existing clients, progressing well.

In particular new business success has been made across the compliance suite and subscription management solutions, with sales of Aptitude Insurance Calculation Engine to a large Canadian insurer and the sale of eSuite to a UK based video production company.

The Board remains confident that the ongoing work across the business continues to position Aptitude well enough to capitalise on the significant growth opportunity presented by Fynapse.

The Equity

There are some 56.97m shares in issue.

Former Microgen Chairman Patrick Barbour holds 5.15% of the equity.

Other large holders include Long Path Partners (15.53%), Schroder Investment Management (13.07%), Mission Trail Capital Management (7.87%), Invesco Asset Management (6.63%), Canaccord Genuity Wealth (6.57%), Herald Investment Management (4.31%), Soros Fund Management (3.90%), Norges Bank Investment Management (2.69%) and BennBridge (2.17%).

Analyst’s View

The trio of analysts at Canaccord Genuity Capital Markets – Kai Korschelt, Hayley Palmer and Minal Patel – rate the group’s shares as a Buy, looking for 470p a share in due course.

Their current year estimates to end December are for £71.0m (£74.7m) sales, while adjusted pre-tax profits could be £10.6m (£9.6m), with earnings of 15.7p (15.0p) per share.

For next year they see £74.4m sales, £12.3m profits and 18.0p of earnings.

For 2026 they have pencilled in £80.3m, £13.4m and 19.6p respectively.

The analysts conclude that

“With an attractive commercial proposition and clear strategy and roadmap for Fynapse, our confidence in the company returning to growth in 2025 is increasing.

The shares’ CY25E 2.5x EV/Sales and 20x P/E (17.7x ex-cash) multiples, in our view, undervalue the business given blue chip customers, mid-teens margins and ~75% of revenues recurring and UK finance software peers on 25x P/E.”

My View

This company is winning new business with some very big names, which inspires both new client and investor confidence.

The shares, which three years ago were trading at almost 700p, were down to 224p by last October.

Since then they have risen steadily, touching 389p at the end of May – they are now just 370p, valuing the group at £212m, and looking very capable of responding positively to further good news.

The FTSE 100 and FTSE 250 jumped in early trade on Friday as investors cheered a Labour victory providing the UK with an opportunity to shake up its economy under Keir Starmer’s leadership.

Labour won a bumper 412 seats on a platform of growth that resonated with both voters and the markets.

The FTSE 100 surged in the early hours of Friday’s session before falling back. However, it was the more UK-centric FTSE 250 that produced a sharp rally as investors jumped into shares well-placed to benefit from Labour’s growth agenda.

A relief rally in the pound demonstrated financial markets’ views on the election result, yet the stronger pound acted as a counterweight to the FTSE 100’s housebuilders and retailers with overseas earners such as HSBC, Rio Tinto, Shell and BP falling on the day.

The FTSE 100 was up just 0.05% at the time of writing, while the FTSE 250 gained 1.2%.

“There is always a sense of nervousness ahead of markets opening the day after a general election, but we only get extreme volatility when investors are caught by surprise. This time round, there was nothing to get heads spinning as the result was widely expected. Instead, investors appeared to welcome the news with open arms,” said Dan Coatsworth, investment analyst at AJ Bell.

“Political uncertainty is over and this removes one of the key risks around UK equities, so it’s feasible that more domestic and foreign investors are now looking for opportunities on the market. This suggests today’s reaction might not be a one-day sensation.”

Coatsworth continued to explain the Labour government could be a turning point for the UK’s beleaguered equity markets:

“Theoretically, we could see a snowball effect whereby the more the UK market goes up in response to the election, the more people start to get drawn in. There is no guarantee that will happen, but such a response would certainly be long overdue given how UK equities have been unloved since the Brexit vote in 2016.”

Housebuilders were clear winners on Friday with Persimmon, Barratt Developments, Taylor Wimpey, and Vistry dominating the FTSE 100 leaderboard.

“Housing was a hot topic during the election campaign, and with Labour vowing to kickstart the development of thousands of additional new homes,  the pressure will be on to get the ball rolling. UK house builders such as Persimmon and Barrett have suffered steep drops in share price following interest rate hikes, so they will be hoping for a reversal in fortune if and when these initiatives get underway,” said Mark Crouch, analyst at investment platform eToro.

Labour has secured a historic mandate in the general election. It will now set about delivering on its manifesto and providing the policy detail critics say their campaign lacked.

The market was a little moved on Friday, reflecting the telegraphed nature of the result. That said, subtle moves in financial markets could be signs of things to come.

We examine what investment experts think a Labour government could mean for UK investors and your investments.

UK shares

Judging by the market reaction on Friday, equity traders were encouraged by the magnitude of Labour’s victory and freedom it affords them to push through their growth agenda.

Strategists have highlighted several sectors that will enjoy tailwinds under Labour, most notably clean energy and construction.

“In terms of investment strategies, we can expect sectors related to clean energy and infrastructure to experience a boost based on Labour’s pledged policies in these areas. Other key sectors likely to benefit include banking, construction, and retail,” said Yazmin Boden, Partner of GSB Wealth.

“Labour’s pro-growth funding strategy is likely to provide a favourable environment for medium-sized companies listed on the FTSE 250 index. The creation of a national wealth fund and support for key sectors like financial services and automotive should stimulate business investment.

“The anticipated stability of a Labour government – following a merry-go-round period of Conservative prime ministerial changes in such quick succession – is likely to be warmly welcomed by the Markets, its centrist platform having a net positive effect on financial markets, and we could see a stock market uptick going into Q3.”

Housebuilding Shares

Housebuilders were the standout performers in the very early hours of Starmer’s tenure. At the time of writing, Vistry was the FTSE 100’s top gainer, as investors piled into the builder in the hope that Labour would deliver on its pledge to build 1.5 million homes. Persimmon, Taylor Wimpey, and Barratt Developments were not far behind Vistry on Friday.

Mark Crouch, analyst at investment platform eToro, highlighted that Labour were likely to move supportive of home building than the Tories and provide the sector a much-needed boost after years of high interest rates.

Crouch explains, “Housing was a hot topic during the election campaign, and with Labour vowing to kickstart the development of thousands of additional new homes,  the pressure will be on to get the ball rolling.”

“UK house builders such as Persimmon and Barrett have suffered steep drops in share price following interest rate hikes, so they will be hoping for a reversal in fortune if and when these initiatives get underway.”

House Prices

Labour’s victory coincided with the release of the Halifax Price Index revealing the average UK prices fell 0.2% in the month to June. So while Labour promises a boost in the number of homes built, it has its work cut out to support prices explained Sarah Coles, head of personal finance, Hargreaves Lansdown.

“The property market is likely to be near the top of the government’s agenda in the coming weeks – and not just the removal van at Number 10,” Coles said.

“However, it isn’t going to make much of a difference in the short-term. House prices and sales have been tepid for most of 2024 so far, and they don’t look likely to warm up any time soon.

“The market is suffering from a dearth of demand, as higher mortgage rates and sky-high house prices have priced so many buyers out of purchases. During the election campaign, there was plenty of talk of stimulating the demand side, but not from Labour. Aside from guaranteeing mortgages for buyers with smaller deposits, it is committed to tackling the supply side of the equation instead. It promised to get stuck into reforming the property market and the planning system, as soon as its collective feet are under the desk in Number 10, but we know this is likely to be a gradual and tortuous process.”

Smaller Companies

William Tamworth, co-manager of the Artemis Smaller Companies Fund, believes Labour’s focus on growth could revive the fortunes of the UK’s smaller companies. Although Labour’s policy details are scant, Tamworth sees the change in government as a positive catalyst for UK sentiment that will ultimately filter down into the UK’s most innovative growth companies.

“The Labour manifesto was light on big promises, but it actually made a welcome commitment to stability – despite being titled ‘Change’,” William Tamworth said.

“Economic and political stability, together with an aspiration to strengthen relationships with Europe, could be an important step in rewriting the current negative narrative surrounding the UK.

“After years of outflows, a small change in sentiment could have a magnified impact on the share prices of listed smaller companies.

“Labour also appears to be supportive towards financial services, describing it as ‘one of Britain’s greatest success stories’. The party suggests it will create the conditions to support innovation and growth in the sector through backing new technology and ensuring a pro-innovation regulatory framework.”

UK Gilt Yields

Gilt yields are likely to fall as the furore around the election subsides and investors settle into a Labour government cautious about pushing through radical changes that could upset sentiment, explained Samer Hasn Market Analyst at XS.com.

“While the Labor Party had made promises to make British politics pragmatic and put rule in the hands of technocrats, in addition to “stopping the chaos” brought by the Conservatives,” Hasn said.

“I believe that these promises, if fulfilled, may provide a state of comfort in the street after the dramatic developments in recent years, thus enhancing the state of certainty, whether economic or political. This is what I also believe may push gilt yields further below, which may put pressure on the pound in turn.

“British bond yields have already declined, but the weakness of the dollar and the decline in Treasury yields appear to have moderated that negative effect and ultimately led to further gains in the pound.”