The transaction, valued at GBP3.3bn (US$4.23bn), represents an increase on Carlsberg’s earlier pair of offers made late last month that topped out at $3.93bn. Britvic’s board said today that it will recommend the move to shareholders that has an EBITDA value multiple of 13.6x.
By way of ground preparation, Carlsberg is also set to buy out UK joint-venture partner Marston’s to the tune of GBP206m, which will allow for the “full integration” of Britvic into Carlsberg’s UK division, Carlsberg Marston’s Brewing Co. Meanwhile, PepsiCo, which has a longstanding bottling agreement with Britvic for its soft drinks brands in the UK and Ireland, will waive the ‘change of control’ clause in the existing arrangement.
On completion, Carlsberg, which bottles for PepsiCo in five Western European and Asian markets, “is expected to become the largest PepsiCo bottling partner in Europe”.
In its statement, the brewing group flagged its identification of “annual cost savings and efficiency improvements” of around GBP100m and expects the purchase to become operating margin accretive after three years. A subsequent presentation today also described the move as “compelling” while supporting the +4%-to+6% long-term sales growth target.
“We are pleased that the Britvic board is unanimously recommending our offer to Britvic shareholders,” said Carlsberg CEO Jacob Aarup-Andersen. “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 other markets in Western Europe.
“We are excited about expanding our global partnership with PepsiCo and believe that the longer-term opportunities will be very beneficial for both companies.”
The acquisition is expected to complete in the first quarter of next year.
As well as being the largest supplier of branded still soft drinks and the number two supplier of branded carbonated soft drinks in the UK, Britvic also has presence in France, with the likes of Tesseire and Pressade, and in Brazil, through Maguary, Bela Ischia and Extra Power. The business has a current market capitalisation of GBP3.12bn.
Carlsberg’s existing operations in soft drinks, meanwhile, account for 16% of total volumes. ‘Core beer’ has the largest volume share at 59%, followed by ‘premium beer’ at 19%.
