Source: AFP
Danish brewer Carlsberg said on Monday it had reached an agreement to buy British soft drinks company Britvic for 3.3 billion pounds ($4.2 billion).
The announcement came just over two weeks after the maker of Robinsons squash fruit drink rejected a £3.1bn takeover approach from Carlsberg, claiming it significantly undervalued the company.
“The boards of Carlsberg Group and Britvic PLC announced today that they have reached an agreement on the terms of a proposed cash offer… to acquire the entire issued and common share capital of Britvic,” Carlsberg said in a statement.
Britvic shareholders are being offered a 7.9% premium to Friday’s closing price and 36% to the share price a month ago.
Britvic directors have unanimously recommended the offer, which will create a single integrated drinks company called Carlsberg Britvic.
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Britvic is PepsiCo’s main partner in Britain and Ireland with exclusive rights to manufacture and sell brands including Pepsi, 7UP and Lipton Ice Tea.
“The acquisition of Britvic will also further strengthen Carlsberg’s close relationship with PepsiCo, which currently spans five markets across Western Europe and Asia,” said Carlsberg, which added that PepsiCo had agreed to divest from the change of control clause in its bottling agreements with Britvic. .
Britvic non-executive chairman Ian Durant said in a statement that the proposed deal “creates an enlarged international group that is well-positioned to take advantage of growth opportunities across multiple drinks sectors”.
Carlsberg chief executive Jacob Aarup-Andersen said the deal would support the brewer’s growth ambitions and would be “immediately accretive to earnings and value growth in the third year”.
“Compelling strategic value”
A joint statement said Carlsberg estimated the deal could deliver annual cost savings and efficiency improvements of £100m, which it expects to deliver over the five years after the acquisition is completed.
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It said savings are expected to be made in a number of areas, including direct and indirect procurement, supply chain, administration and overhead in the combined Carlsberg and Britvic business, but that Carlsberg has also committed to investing in Britvic’s operations.
Britvic’s Durant said “the Board believes the strategic merits of this offer are compelling” and “unanimously recommends the offer to our shareholders”.
No date has yet been set for a shareholder meeting to approve the transaction, but the filing said the companies expect the transaction, which is also subject to regulatory approvals, to close in the first quarter of next year.
Richard Hunter, head of markets at Interactive Investor, noted that Britvic shares jumped about five percent after the announcement, but did not hit the offer price.
He said “market reaction was clouded by an accompanying trading statement from Britvic, which indicated some revenue weakness.”
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That leaves “the door open for further developments on the proposed acquisition,” Hunter added.
Britvic also said on Monday that revenue rose 6.3% against a 2.2% increase in sales volumes in the April-June quarter.
“Encouragingly, this was achieved despite poor weather this year and difficult comparables from last year, when revenue was up 9.9 per cent,” said the company’s chief executive Simon Litherland.
Source: AFP
