British soft drinks company Britvic has confirmed that it has received two takeover approaches from Danish brewing giant Carlsberg this month. The first offer, valued at £2.99bn, was rejected. The second offer, valued at £3.1bn, was also rejected due to being significantly undervalued.
Carlsberg, the third largest brewer in the world after US-based AB InBev and Dutch company Heineken, stated that the potential acquisition of Britvic would allow them to capture long-term growth opportunities from Britvic’s portfolio of leading brands in the beverage market. Britvic’s brands include Robinsons, J2O, Fruit Shoot, Tango, Aqua Libra, Ballygowan mineral water, and R White’s lemonade. The company is also the bottler for PepsiCo in Great Britain.
This offer from Carlsberg does not come as a surprise, as Britvic’s share price performance has made the company vulnerable. Despite a recent rally, the company’s shares were still trading at a discount compared to pre-pandemic levels. This has allowed Carlsberg to make its move.
Britvic’s management has been frustrated with its share price performance for many years, particularly in comparison to its competitor Fever Tree, which saw a significant increase in its share price after its stock market flotation in 2014. However, Britvic’s sales are five times that of Fever Tree’s, reflecting the challenges the company has faced, such as the UK’s sugar tax and changing consumer tastes.
Carlsberg’s offer, at just over 13 times Britvic’s earnings before interest, taxation, and accounting charges, may not seem generous. However, Carlsberg may be cautious after their previous overpayment for Scottish & Newcastle in 2008.
If the acquisition is successful, Carlsberg will acquire a company with a rich heritage, dating back to 1784 as a mineral water supplier. Britvic’s most iconic brand, R White’s, dates back to 1845 and is still beloved by many Britons. Ironically, a takeover by Carlsberg would reunite Britvic with one of its former owners, as the company was previously owned by three major UK brewers.
Britvic has also been subject to takeover rumors in the past, most notably from PepsiCo. However, PepsiCo sold its stake in Britvic in 2017, and Carlsberg would be wise to obtain their blessing before proceeding with a firm offer.