Carlsberg Group and PepsiCo have struck a deal over the UK and Irish bottling rights for the US giant’s products should the brewer buy Britvic.
Britvic, which bottles and distributes PepsiCo brands in the UK and Ireland, last week revealed it had received – and turned down – two takeover bids from Carlsberg earlier this month.
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In a statement issued today (24 June), Carlsberg said PepsiCo had waived its “change of control clause” in the bottling contracts the Pepsi Max owner has with Britvic. The Tuborg brewer, meanwhile, distributes PepsiCo drinks in Norway and Switzerland.
“This waiver will come into effect should an acquisition of Britvic by Carlsberg, which has the recommendation of Britvic’s board, proceed to completion,” Carlsberg said in its statement.
On Friday, Carlsberg revealed it had rejected two takeover bids from Carlsberg in the space of two weeks.
Carlsberg’s latest proposal, sent on 11 June, amounted to an offer of around £3.2bn ($3.9bn) for the Robinsons squash maker, or 1,250 pence a share. The Danish brewer’s first bid, made on 6 June, stood at 1,200 pence a share.
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By GlobalDataIn its statement on Friday, Britvic said its “board unanimously rejected the second proposal on 17 June 2024” and added: “The board remains confident in the current and future prospects of Britvic. It recognises its fiduciary duties and will consider any further proposal on its merits.”
It was reported by The Times on 21 June that Carlsberg was preparing to make a third bid for the group, valuing it at $3.58bn. Approached by Just Drinks today, Carlsberg declined to comment.
The brewer has said the acquisition would align with its growth strategy announced in February, which included plans to expand its portfolio outside of beer.
Carlsberg, one of the world’s largest brewers but with a portfolio that takes in soft drinks, said a deal would enable it to “capture appealing long-term growth opportunities from Britvic’s comprehensive portfolio of leading brands in an attractive segment of the beverage market where Carlsberg already has a strong track record”.
The company already markets its own soft drinks, with brands including Tuborg Squash Light in Denmark, Tuborg Soda in Greece and Xixia in China.
The second offer to buy Britvic represented an implied enterprise value multiple of over 13 times the Fruit Shoot maker’s adjusted EBITDA of £302m for the twelve-month period ended 31 March 2024, according to Carlsberg.
In Britvic’s first-half results for its fiscal 2024, the business booked a 10.9% rise in revenue to £880.3m ($1.11bn) for the six months to the end of March, helped by “price/mix” but the company did manage to also grow volumes.
The company also booked a 15.3% increase in EBIT to £93.1m and a 10.1% rise in profit after tax to £59.9m.
In Britvic’s most recent full financial year, some 68% of its revenue came from its business in Great Britain. It also has operations in markets including France and Brazil.
