UK soft drinks maker Britvic (BVIC) looks set to become the latest FTSE 250 mid-cap company to exit the London stock market after agreeing to an improved £3.3 billion offer tabled by Danish brewer Carlsberg (CARL-B:CPH) on 8 July.
The deal will see Britvic shareholders receive £12.90 in cash for each Britvic share, plus a 25p per share special dividend prior to the transaction going through.
The writing has been on the wall for Britvic as an independent company since confirming media speculation that Carlsberg had approached the Britvic board in June. The UK firm subsequently rejected two proposals from Carlsberg pitched at £12 and £12.50 per share, claiming that the offers ‘significantly’ undervalued Britvic ‘and its current and future prospects’.
The agreement needs 75% support from Britvic shareholders at a general meeting, with a date yet to be set.
‘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,’ said AJ Bell’s investment director Russ Mould.
At a combined £13.15 per share, the offer price represents a premium of roughly 36% to the Britvic share price before Carlsberg’s interest.
Carlsberg, known the world over for its advertising tagline, ‘Probably the best beer in the world’, had been expected to come back with a better offer after US giant PepsiCo (PEP:NASDAQ) agreed to waive the change of control clause in its bottling arrangements with Britvic, which has an exclusive licence with the US soft drinks-to-snacks giant to make and sell brands including Pepsi, 7UP and Lipton Ice Tea in the UK and Ireland.
Carlsberg’s acquisition of Britvic adds diversification to its portfolio as it reacts to a world in which younger age groups are less likely to indulge heavily in alcohol.
Carlsberg said in a separate announcement on the same day that it will buyout partner Marston’s (MARS) from the pair’s brewing joint venture. This was a significant development for Marston’s, allowing management to bring focus to a pubs estate which has struggled to fully recover in the wake of the pandemic and improve a balance sheet which was badly scarred by Covid lockdowns. The net proceeds of £202 million will allow for a significant debt paydown which accelerates the timeframe for achieving the group’s medium-term target of reducing net debt below £1 billion.
Effective net debt is reduced to around £959 million which is anticipated to save around £18 million in annual interest payments.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Tom Sieber) own shares in AJ Bell.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
magazine
