30th Jan 2025 14:00
(Alliance News) - Fevertree Drinks PLC on Thursday said it intends to launch a share buyback programme for up to GBP71.0 million, on the back of a new partnership with Molson Coors Beverage Co for the exclusive distribution and production of the Fevertree brand in the US.
Shares in the London-based maker of carbonated mixers were up 21% at 799.11 pence each in London on Thursday afternoon. The stock remains down 23% in the past year.
Under the terms of the deal, Molson Coors will acquire an 8.5% stake in Fevertree for GBP71.0 million, or 654.2p per share.
Proceeds from the share issue will be returned to shareholders by way of a share buyback programme, due to begin at the beginning of February, for up to GBP71.0 million.
"Due to the enhanced cash generation of the business under the strategic partnership, we remain mindful of our capital allocation framework and will consider the opportunity for further shareholder returns beyond this initial buyback programme," said Fevertree.
Molson Coors will also acquire Fevertree USA Inc, the brand's US operating entity, for USD23.9 million. The US branch represented 2% of the group's total profit in 2023.
Fevertree Chief Executive Officer Tim Warrillow said: "Thanks to the superb work of our US team, we have seen Fevertree become the number one brand in both the tonic and ginger beer categories, a remarkable achievement which has redefined the US mixer category amongst consumers and customers alike."
Warrillow added: "With a national network providing significant scale and muscle, alongside its proven track record, supply chain expertise and clearly stated strategic desire to drive the future of their business beyond beer, Molson Coors are the ideal long-term partner to take the Fevertree brand to the next level across the US. This partnership will be fuelled by a step change in marketing investment to take advantage of the highly compelling opportunity ahead."
Ahead of its 2024 results, Fevertree expects to report total revenue of GBP367.9 million for the year, up 1.0% from GBP364.4 million in 2023.
It also expects to deliver a "strong uplift" in adjusted earnings before interest, tax, depreciation and amortisation for the year, in line with its prior expectations.
For 2025, Fevertree forecasts low single digit group revenue growth, alongside a "short Ebitda impact as we transition the business".
The group is "confident" in delivering a double-digit increase in revenue and Ebitda in 2026, as well as a "significant step-up" in its investment into US marketing.
"We expect a sustained uplift in group revenue and Ebitda growth in the medium term as we fully realise the benefit in the US of Molson Coors' distribution platform, operational scale and expertise, and investments behind the brand," Fevertree said.
By Emily Parsons, Alliance News reporter
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