Britvic Agrees to Takeover Offer from Carlsberg After Initial Rejection
After initially rejecting a takeover bid from Danish brewing giant Carlsberg as “significantly” undervaluing the company and its potential, Britvic has now agreed to sell itself to Carlsberg. The decision comes just three weeks after the initial offer was turned down.
The new deal includes an increase in terms from 1250p per share to 1315p per share, with 1290p in cash and a 25p per share special dividend. The Britvic board has been in discussions with shareholders to determine an acceptable price and the increased terms seem to have convinced them.
In addition, PepsiCo, with whom Britvic has an exclusive bottling arrangement, has waived a clause in their agreement that would have allowed them to end the deal in the event of a takeover. This clause, known as a “poison pill,” was seen as a potential obstacle to the takeover and its removal has cleared the way for the deal to proceed.
Ian Durant, Britvic’s chairman, commented on the uncertainty caused by the clause in the company’s announcement confirming the takeover. Silviu Popovici, CEO of PepsiCo Europe, also expressed support for the deal, stating that it has the potential to strengthen sales and distribution capabilities for their brands in key markets.
The price that Carlsberg is paying for Britvic is slightly lower than what analysts had expected. However, the £3.3bn offer was still enough for Carlsberg to gain control of a portfolio of well-known brands such as Robinsons, J2O, Fruit Shoot, Tango, Aqua Libra, Ballygowan mineral water, and R White’s lemonade.
In a surprising turn of events, Carlsberg also announced a separate deal to acquire the remaining 60% stake in a brewing joint venture with pub operator Marston’s for £206mn. This joint venture, announced last year, aimed to create one of the UK’s largest brewing, beverage, and distribution businesses. With this acquisition, Carlsberg becomes the UK’s biggest player in cask ale, taking full ownership of brands such as Marston’s Pedigree, Hobgoblin, Wainwright, Young’s, Courage, Banks’s, Jennings Cumberland Ale, and McEwan’s.
This portfolio of brands has been built up over many decades, with Marston’s acquiring several breweries and brands, including Thwaites, Charles Wells’s Eagle Brewery, and Young’s. The takeover may raise concerns among real ale enthusiasts about Carlsberg’s commitment to cask ale, but the company has partnerships with pub companies and supermarkets that could potentially benefit smaller brands under its ownership.
The timing of this major consolidation in the UK brewing industry is notable as it coincides with the election of a new Labour government. The UK brewing industry was once dominated by the “Big Six” companies, but this changed in 1989 when the government ordered them to sell most of their pubs in order to increase consumer choice. Since then, there have been several mergers and acquisitions, with Carlsberg and Heineken acquiring Scottish & Newcastle in 2008.
Marston’s decision to sell its brewing business and focus on its higher-margin pub and restaurant operations has already led to a 15% increase in its stock. As Britvic and Marston’s move forward under the ownership of Carlsberg, cask ale lovers will be watching closely to see how the beloved brands are managed by their new owner.
