14th May 2007 07:02
Britvic plc14 May 2007 Announcement re Acquisition (FOR IMMEDIATE RELEASE) Monday 14th May 2007 Britvic plc ("Britvic") Acquisition of the soft drinks and related businesses of C&C Group plc ---------------------------------------------------------------------- Summary------- The Board of Britvic is pleased to announce that it has agreed to acquire thesoft drinks and distribution businesses ("CCSD") of C&C Group plc for €249.2m(£169.5m) in cash. CCSD owns a number of leading brands in the Republic ofIreland and Northern Ireland ("the territory"), including Club, Ballygowanwater, Britvic, Cidona, MiWadi, and Energise Sport as well as the rights toPepsi and 7Up brands in the territory through its bottling agreements withPepsiCo. Commenting on the acquisition, Paul Moody, CEO of Britvic: "This is a great opportunity to accelerate earnings growth and provides us witha leading position in the soft drinks markets in both the Republic of Irelandand Northern Ireland. Additionally, there is exciting potential for supply chainsynergies, brand and product expansion and innovation. This is an important acquisition for Britvic as we seek to grow the businessboth within the UK and by selective international expansion. We are very pleasedto welcome an experienced and highly capable CCSD senior management team andtheir colleagues. We believe we have many opportunities to further develop bothCCSD's own brands and the Pepsi and 7Up brands in these markets." Rationale for the acquisition and financial effects--------------------------------------------------- The transaction represents an important step in the strategic development ofBritvic, consolidating complementary businesses in the territory and adding toBritvic's position in Great Britain. The transaction is expected to be earnings enhancing before integration costs inthe first full year, and will cover Britvic's cost of capital in the second fullyear. Britvic anticipates annual pre-tax synergies of around €14m, to include thefollowing: • Improved revenue growth through increased focus and leveraging brand portfolio strength;• Increased utilisation of the existing supply chain network;• Scale benefits in direct procurement;• System benefits driving indirect procurement savings. The anticipated integration costs to achieve these synergies will be in theregion of €20-€25m over the first three years, around half of which is estimatedto be capital expenditure. One-off working capital benefits in the same periodare expected total between €6-7m. This acquisition represents the most significant step to date in Britvic'sacquisition growth plans highlighted at the time of flotation in 2005. It will: • Accelerate short-term growth and provides further significant opportunities for Britvic to drive scale economics whilst also leveraging asset efficiency across a broader product and geographic footprint; • Facilitate a low risk incremental expansion to Britvic's international activities alongside our longstanding partner PepsiCo; • Give Britvic, over the mid to longer term, the opportunity to drive the Group's top line growth via: • The potential cross-introduction of selected brands in both countries; • Application of supply chain and commercial best practice; • Acceleration of new product development. Overview of CCSD---------------- CCSD is the second largest branded soft drinks business in territory by bothvolume and value. CCSD's brand profile position is very similar to Britvic's, and it retains fourof the number one soft drinks brands in their categories. It holds the franchisefor PepsiCo's 7Up and Pepsi brands in the territory whilst also having aportfolio of owned brands including Ballygowan, the number one water brand inIreland with volume of 61m litres, the Club brand, which is the number one fruitcarbonate brand with total volume of 42m litres, as well as MiWadi and theBritvic brand. The territory has a total population of 5.8m people (Republic of Ireland 4.2m,Northern Ireland 1.6m) with the greatest growth in the most economically activeage groups (25+ yrs). GDP CAGR 02-07 is 5.6% with disposable income growing at4.1%. The territory has the highest per capita consumption of carbonated soft drinks(CSD's) in Europe (122 ltrs/head compared with an average of 100lts/head). Thereis growing health consciousness centred on sugar consumption and childhoodobesity, and this aligns itself to Britvic's adapting soft drinks portfolio.Water consumption, whilst relatively low, is growing rapidly. There is also ahigh level of interest in 'functional' and 'enhanced' beverages. Terms and Timing of the Acquisition----------------------------------- Expected to be completed before 31st August 2007, the acquisition will be funded100% by debt, using existing debt facilities. Britvic will retain the experienced CCSD senior management team to help ensurecontinuity. Britvic also expects to retain all brands, subject to competitionauthority approval. Competition law in the Republic of Ireland requires notification of thetransaction to the competition authorities with a minimum 30 day gap beforeapproval and hence completion of the transaction. Financial information--------------------- CCSD---- On an IFRS basis, for the year ended 27 February 2007, CCSD had net turnover of€269.9m and earnings before interest, taxation, depreciation and amortisation of€24.7m. Gross assets as at 27 February 2007 were €134.4m. An FRS 17 pensiondeficit of around €20m will also be assumed. The purchase consideration reflects earnings, synergies and also the favourablelocal tax environment. Britvic's Current Trading------------------------- Current trading reflects the positive trends seen earlier in the financial year,with an improved performance in the carbonates market compared with the postChristmas period last year. As a result, management remains confident withregard to the full year outcome. Further information on this and the acquisitionwill be available on Monday 21st May 2007 when our Interim Results will bereleased. INVESTOR ENQUIRIES: Britvic plc 00 44 (0)1245 504 330John GibneyJo GuanoCraig Marks PRESS ENQUIRIES: Britvic plc 00 44 (0)7834 962542Julian Mears Brunswick 00 44 (0)20 7404 5959Tom BuchananConor McClafferty There will be a conference call today at 9.30am for investors, analysts andlending banks where there will be an opportunity to ask questions. Accompanyingslides will be available on britvic.com from 9.00am. There will also be a conference call at 2pm (9am Eastern Time) primarily for USinvestors, noteholders and analysts, and again there will be an opportunity toask questions. A recording of the calls will be available for seven days. Toaccess this call please dial the access number below and use the pin numbergiven. Access number +44 (0)20 8609 0205Pin number 542386#Redial number +44 (0)20 8609 0289Conference reference 172866# Notes to editors---------------- Britvic is one of the two leading branded soft drinks businesses in GreatBritain. The Company is the largest supplier of still soft drinks, the fastergrowing category in the soft drinks market, and the number two supplier ofcarbonates. Britvic plc's broad portfolio of leading brands includes established names withhigh brand recognition such as Robinsons and Tango and highly successfulinnovations such as J2O and Fruit Shoot. Included within the portfolio are thePepsi and 7UP brands, which Britvic produces, markets, sells and distributesunder its exclusive appointment from PepsiCo which runs until December 2023.This brand and product portfolio enables Britvic to target and satisfy a widerange of consumer demands in all major soft drinks categories, via all availableroutes to market. Cautionary note regarding forward-looking statements---------------------------------------------------- This announcement includes statements that are forward-looking in nature.Forward-looking statements involve known and unknown risks, uncertainties andother factors which may cause the actual results, performance or achievements ofthe Company to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements. Except asrequired by the Listing Rules and applicable law, Britvic undertakes noobligation to update or change any forward-looking statements to reflect eventsoccurring after the date such statements are published. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BritvicC&C Group