21st Jun 2024 10:48
(Alliance News) - Soft drinks maker Britvic PLC said Friday it has rejected a pair of takeover approaches from Carlsberg AS, with the brewer possibly targeting the FTSE 250 listing as a way to "protect its future" if alcohol goes out of fashion.
Britvic, the company behind Robinsons squash and R White's lemonade, traded 10% higher at 1,120.09 pence each in London on Friday morning.
Noting "press speculation" Britvic said it received an unsolicited takeover proposal from Carlsberg earlier this month, at an offer price of 1,250 per share. The Carlsberg bid values Britvic's issued and to be issued equity at GBP3.20 billion. It followed a proposal of 1,200p per share.
Britvic believes the bids undervalue its prospects.
"Britvic believes its products are probably the best soft drinks in the world because it is not letting Carlsberg rock up and buy the company on the cheap. Trading on just 15 times earnings before revealing the bid approach, Britvic is a classic example of a company that quietly got on with the job. There was no glamour around its products, investors didn't hype up the stock, and it sat quietly on the UK market slowly growing sales and revenue. Often, it's only when something is taken away that you miss it, and investors might take that view if Britvic was gobbled up and delisted," AJ Bell analyst Russ Mould commented.
"Carlsberg is not the first company you would suggest when trying to compile a list of potential buyers for Britvic. It is known for selling beer and lager, but there have been hints it wanted to diversify. A 'Beyond Beer' strategy is in place and has seen the company explore other avenues such as hard seltzers. Britvic would effectively act as a springboard to accelerate that diversification and take the company into an adjacent market."
The clock for Carlsberg is now ticking, and it has a 'put up or shut up' deadline of the close of play on July 19.
Mould added: "Drinking trends are evolving and there is a growing movement of people shunning alcohol. The rise of non-alcoholic beers, gins and wines has provided more choice and made a lot of people realise they can still enjoy a night out without getting drunk. Furthermore, younger adults don't seem to have the thirst for loading up on booze like their parents or grandparents might have had at the same age. Carlsberg seems to have taken the view that it needs to diversify to protect its future and Britvic looked like a ripe opportunity potentially at a reasonable price.
"Two rejected approaches later, Carlsberg needs to decide how much it wants to own Britvic as it will have to dig a lot deeper to win over the board and shareholders."
By Eric Cunha, Alliance News news editor
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