The Carlsberg Group and Britvic have announced that an agreement has been reached on the terms of a recommended cash offer for the acquisition of the latter by the former.
Whilst the Danish-founded Carlsberg Group predominantly produces alcoholic beverages, British-based Britvic is best known for manufacturing soft drinks including brands like Tango, J20 and Robinsons.
Britvic is also the main partner for PepsiCo in the UK and Ireland, with exclusive rights to manufacture, bottle and sell brands such as Pepsi, 7UP and Lipton Ice Tea.
According to the official offer document, this offer values ‘the entire issued and to be issued ordinary share capital of Britvic’ at approximately £3.3 billion on a fully diluted basis and an implied enterprise value of approximately £4.1bn.
If the deal were to go through, Britvic shareholders would be entitled to £13.15 pence per share, which includes a 25p-per-share ‘special dividend payment’.
Advised by Morgan Stanley and Europa Partners, the Britvic board of directors deemed the terms of the offer to be ‘be fair and reasonable’, and as such declared their intention to ‘recommend unanimously that Britvic shareholders vote in favour of the scheme’.
Logistics Manager recently visited Britvic’s site in Rugby to learn about how products are made, stored and shipped. To find out how the manufacturer is using AI and machine learning to improve efficiency, check out this feature on AI in the supply chain from the July issue!
Carlsberg identified Britvic as ‘one of the leading soft drinks businesses in Great Britain, Western Europe and Brazil’, describing the acquisition as a ‘highly attractive opportunity for Carlsberg’ which ‘supports its overall growth ambitions’.
It hopes that the acquisition of Britvic will allow Carlsberg to build on its bottling business in the Nordic region and strengthen its footprint in Western Europe and plans to ‘accelerate commercial and supply chain investments in Britvic, driving the future growth trajectory of the business’.
Having simultaneously agreed to acquire Marston’s minority stake in Carlsberg Marston’s Brewing Company, Carlsberg has made its intentions clear, announcing that it plans to create a single integrated beverage company in the United Kingdom, to be named Carlsberg Britvic.
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.”
Commenting on the acquisition, Ian Durant, non-executive chair of Britvic, added: “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.”
With Britvic having manufactured and sold Pepsi in Great Britain since 1987 and in Ireland since 2007, Carlsberg hopes that this acquisition will also ‘further strengthen Carlsberg’s close relationship with PepsiCo, which currently spans five markets across Western Europe and Asia’.
Silviu Popovici, CEO of PepsiCo Europe, commented: “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.”
