Britvic strikes £3.3bn takeover by Carlsberg
- The Danish group also revealed it had bought out Marston's 40% stake in CMBC
Carlsberg has agreed to spend £3.3billion on buying mixers and soft drinks maker Britvic.
The Danish drinks giant's latest £13.15 per share proposal, which includes a 25 pence per share special dividend, represents a 36 per cent premium to Britvic's share price before the offer period started last month.
It will bring Britvic's mixers and soft drinks, such as Tango and Robinsons squash, under the same roof as beer brands, including Carlsberg, Kronenbourg and Holsten Pils.
Alongside the Britvic acquisition, Carlsberg revealed it had bought out Marston's 40 per cent stake in the Carlsberg Marston's Brewing Company for £206million.
In the mix: Carlsberg has agreed to spend £3.3billion buying the mixers, Tango and Robinsons squash producer Britvic
Britvic turned down two previous bids from Carlsberg last month because it said they undervalued the business and its future prospects.
Carlsberg said the takeover will strengthen its relationship with PepsiCo, with whom it has enjoyed a longstanding partnership across numerous core markets in Europe and Asia.
To ensure the deal goes through, PepsiCo has consented to waive the change-of-control clause in its bottling arrangements with Britvic.
PepsiCo currently grants Britvic exclusive rights across the British Isles to make and sell brands ranging from Pepsi Max to 7UP and Lipton Ice Tea.
Once the transaction is finalised, which the two firms expect to happen in the third quarter of 2024, Carlsberg expects it to be earnings accretive right away and value accretive within three years.
The Copenhagen-based company also anticipates delivering about £100million in cost savings and efficiencies over five years.
But the acquisition will not be finalised without the approval of three-quarters of Britvic investors. Britvic shares jumped 4.9 per cent to £12.68 by midday on Monday.
Ian Durant, Britvic's non-executive chairman, said the enlarged business is 'well-placed to capture the growth opportunities in multiple drinks sectors.
'Crucially, to remain competitive at a time when the market is being shaped by the trend of increasing consolidation among bottling partners, Carlsberg's agreement with PepsiCo provides the combined group with a strong platform for continued success.'
Marston's, which operates over 1,370 sites across the UK, intends to use proceeds from the sale on reducing net debts to below £1billion at a significantly faster pace than anticipated by its medium-term target.
In addition to creating a healthier balance sheet, the Wolverhampton-based group said the disposal will enable it to focus on being a pure-play hospitality business while benefiting from its brand distribution agreement with CMBC.
Following the deal's announcement, Marston's shares jumped 17.3 per cent to 36p in morning trading, making them the FTSE All-Share Index's biggest riser.
CMBC was formed in 2020, at the height of the COVID-19 pandemic, when Marston's sold its brewing operations to Carlsberg's UK division for £780million.
When the tie-up was agreed, Marston owned six breweries, including the now-closed Wychwood brewery in Oxfordshire, which produced the Hobgoblin and King Goblin ales.
Carlsberg paid Marston's £273million upfront in return for a 60 per cent share of the business and the ability to sell its drinks brands, such as Danish Pilsner, Kronenbourg and Somersby Original Cider in the company's pubs.
However, Marston's said the joint venture had been impacted by many 'unforeseen macro and socio-economic factors,' like inflation, Covid-19, and growing operating costs.
Britain's brewing sector has been badly affected by the cost of living crisis affecting businesses and consumers in recent years, with soaring energy prices squeezing incomes and profits.
The number of breweries entering insolvency skyrocketed by 82 per cent in 2023, according to recent figures from auditor Mazars.
Marston's also told investors that selling its CMBC stake 'removes the distraction of non-core assets' over which it lacks day-to-day operational control.
Justin Platt, chief executive of Marston's, said the disposal 'represents a significant milestone' for the firm.
He added: 'In my first six months with the business, it has become very clear to me that our core capability and key opportunity to unlock value for shareholders is in driving a focused and successful pub business.'
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