Shares in Britvic gain ground after Carlsberg’s takeover chances are boosted
SHARES in Britvic gained further ground yesterday after Carlsberg appeared to make a significant breakthrough in its quest to acquire the soft drinks giant.
The Danish brewer informed the stock market that it had struck a deal with Pepsico “to waive the change of control clause in the bottling arrangements it has with Britvic”.
“This waiver will come into effect should an acquisition of Britvic by Carlsberg, which has the recommendation of Britvic’s board, proceed to completion,” the statement added. “Carlsberg is considering its position. There can be no certainty that any offer will be made.”
The development came shortly after Britvic rebuffed a second takeover proposal from Carlsberg on Friday, declaring that the offer price of 1,250p per Britvic share, or $3.9 billion (£3.1bn), “significantly undervalues Britvic, and its current and future prospects”. The initial approach from Carlsberg, which was received on June 6, was worth 1,200p per Britvic share.
Shares in Britvic closed the day up 7%, taking the price to 1,173p; shares had been trading at 969.5p before details of the Carlsberg approaches were disclosed on Friday (June 21).
City analyst Russ Mould, investment director at AJ Bell, said the deal Carlsberg has secured with Pepsi is “significant”.
“Britvic shares were in demand as the market waits for the bid situation involving Carlsberg to play out,” Mr Mould said. “News the Danish beer maker has agreed with Pepsico to waive the change of control clause on the latter’s bottling arrangements with Britvic is significant.
“This is a demonstration of Carlsberg’s commitment to the deal and, given the commercial attractiveness of this bottling contract, could give it the leeway necessary to come back with a more generous offer after being rejected twice so far.”
Mr Mould had on Friday outlined the rationale for Carlsberg’s interest in Britvic, noting that the brewer has been hinting at diversifying beyond its staple beer and lager markets.
“A ‘beyond beer’ strategy is in place and has seen the company explore other avenues such as hard seltzers,” Mr Mould said. “Britvic would effectively act as a springboard to accelerate that diversification and take the company into an adjacent market.
“It has already dipped its toe into the water with soft drinks such as Tuborg Squash Light and Xixia Pineapple & C. Owning Britvic would turbocharge its position in this sector.”