BY Richard Summerfield
Danish brewer Carlsberg has agreed to buy UK soft drinks maker Britvic in a deal worth around $4.2bn.
Following two unsuccessful attempts to acquire the company in June, which Britvic said significantly undervalued it, Carlsberg returned with a sweetened bid of 1315 pence per share – comprising cash and a special dividend of 25 pence a share. The rejected bids priced shares at 1200p and then at 1250p apiece.
Carlsberg expects the deal to deliver a number of benefits, including cost and efficiency savings worth $128m over five years, thanks to common procurement, production and distribution networks. Carlsberg plans to name the new beverage business Carlsberg Britvic.
The deal will also expand Carlsberg’s existing relationship with PepsiCo. Britvic bottles PepsiCo drinks in the UK and Ireland while Carlsberg bottles products for the US giant in other countries such as Norway and Sweden. To facilitate the acquisition of Britvic, PepsiCo agreed to waive a change-of-control clause in its contract with the UK firm.
“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,” said Ian Durant, non-executive chair of Britvic. “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,” he continued. “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.”
“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,” said Jacob Aarup-Andersen, chief executive of Carlsberg. “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 committed to accelerating commercial and supply chain investments in Britvic, and we are confident that Carlsberg Britvic will become the preferred multibeverage supplier to customers in the UK with a comprehensive portfolio of market-leading brands,” he added.
“We are looking forward to building on our long-standing and successful partnerships with both Carlsberg and Britvic,” said Silviu Popovici, chief executive of PepsiCo Europe. “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.”