Carlsberg To Acquire Soft Drinks Maker Britvic For £3.3 Billion
Carlsberg is set to acquire Britvic, the British soft drinks maker, for £3.3 billion ($4.23 billion).
The Danish brewer's sweetened bid of 1,315 pence per share, including a special dividend, sealed the deal after a previous offer was rejected. The acquisition is aimed at creating a UK beverage "powerhouse," according to Carlsberg CEO Jacob Aarup-Andersen.
This deal, which will see the formation of Carlsberg Britvic, is expected to deliver significant value to shareholders and drive growth. Aarup-Andersen emphasised Carlsberg's experience in managing both beer and soft drink businesses, dismissing concerns about integration risks.
Britvic Chairman Ian Durant called the offer "compelling" and highlighted the growth opportunities in various drinks sectors. Shareholders of Britvic will vote on the proposed takeover in the coming months.
Despite challenging weather conditions, Britvic posted a 6.3% revenue increase in the latest quarter, further proving its strong market position.
According to Carlsberg, the acquisition will bring benefits such as £100 million in cost and efficiency savings over five years through shared procurement, production, and distribution networks. Additionally, Carlsberg will take over Britvic's bottling agreement with PepsiCo, which could expand to more regions in the future.
The deal aligns with Carlsberg’s strategy to diversify its portfolio as global drinking habits shift. Younger generations are consuming less alcohol, pushing brewers to explore categories like soft drinks, hard seltzer, and non-alcoholic beverages.
In a related move, Carlsberg will also buy out Marston’s 40% stake in their UK brewing joint venture for £206 million. This will give Carlsberg full control of the newly formed Carlsberg Britvic and its associated brands.
Russ Mould, investment director at AJ Bell, noted that Britvic adds valuable diversification to Carlsberg’s portfolio. "The Danish outfit is having to react to a world in which younger age groups are less likely to indulge heavily in alcohol," Mould said.
This acquisition not only enhances Carlsberg’s beverage portfolio but also strengthens its bottling operations and expands its partnership with PepsiCo. As Susannah Streeter from Hargreaves Lansdown pointed out, the deal streamlines Carlsberg's operations across Europe and the UK.
Carlsberg has temporarily halted its share buyback program to focus on reducing its debt, aiming to resume buybacks once it meets its revised debt targets by 2027. The dual acquisitions mark a strategic shift for Carlsberg, positioning it for future growth in a changing market.
