LONDON: Carlsberg A/s reached agreement on the terms of a recommended cash offer to acquire Britvic Plc at the rate of 1,315 pence for each Britvic share, valuing the entire issued and to be issued ordinary share capital of Britvic at approximately £3.3 billion on a fully diluted basis and an implied enterprise value of approximately £4.1 billion.

It is intended that the acquisition be effected by means of a scheme of arrangement. The offer also includes a special dividend payment of 25 pence per Britvic share which is expected to be paid by Britvic prior to the effective date.

Carlsberg recognises that Britvic is one of the leading soft drinks businesses in Great Britain, Western Europe and Brazil. Carlsberg believes that the Acquisition represents a highly attractive opportunity for Carlsberg and supports its overall growth ambitions.

The acquisition will build on Carlsberg’s very successful bottling business in the Nordic region, and deepen and strengthen its footprint in Western Europe, an important region that offers stable and attractive growth prospects. Carlsberg’s intention is to accelerate commercial and supply chain investments in Britvic, driving the future growth trajectory of the business.

Carlsberg has today separately agreed to acquire Marston’s PLC‘s minority stake in Carlsberg Marston’s Limited (CMBC), conditional only on the approval of Marston’s shareholders (if required, as explained in paragraph 14 of this announcement), thereby becoming the sole owner of CMBC.

CMBC has a strong portfolio of beer brands alongside a strong distribution and logistics network. Marston’s will remain an important partner for the new enlarged business, and the long-term Drinks Supply and Distribution Agreement between Marston’s and CMBC will remain in place on substantially the same terms to ensure availability of CMBC’s brands across Marston’s pub estate. The CMBC Transaction is expected to close in the third quarter of 2024.

Carlsberg intends to create a single integrated beverage company in the United Kingdom, to be named Carlsberg Britvic. Carlsberg intends that Carlsberg Britvic shall be led by a management team comprised of individuals from each of Carlsberg, CMBC and Britvic. The enlarged business will have a portfolio of leading brands across the beer and soft drinks categories. Carlsberg envisages that a phased integration will start as soon as practicable after completion of the Acquisition and in conjunction with the Post-Completion Review.

The Combined Group will be able to take advantage of the highly synergistic relationship between beer and soft drinks, including within the areas of procurement, production, warehousing and distribution to increase efficiency and better serve customer needs. Carlsberg’s portfolio of soft drinks currently accounts for approximately 16% of total Carlsberg Group volumes and 27% of volumes in Western Europe.

It is expected that the Acquisition will further strengthen Carlsberg’s close relationship with PepsiCo, who have been a long-standing partner for Carlsberg in a number of Carlsberg’s core markets across Europe and Asia. PepsiCo has agreed to waive the change of control clause in the bottling arrangements it has with Britvic. This waiver will come into effect should an acquisition of Britvic by Carlsberg, which has the recommendation of Britvic’s board, proceed to completion. In addition, Carlsberg has agreed certain terms in respect of bottling arrangements for Britvic that would come into force on completion of the Acquisition (as described in paragraph 13 of this announcement). As a result, following completion Carlsberg is expected to become the largest PepsiCo bottling partner in Europe.

Carlsberg also owns the second largest beer business in France, Brasseries Kronenbourg, which generates sales of approximately DKK6.1 billion (£0.7 billion) and employs approximately 1,000 people. Carlsberg believes that this leading platform provides a compelling opportunity for Britvic’s Teisseire business to enhance its customer and consumer proposition and its financial performance, for the benefit of the people, brands and customers of both organisations.

Ian Durant, Non-Executive Chair of Britvic, said: “Britvic is an outstanding business with a strong heritage built on its portfolio of family-favourite brands, long-standing customer relationships, a well-invested supply chain infrastructure and a fantastic team of people across multiple markets. All these factors have supported a consistent track record of delivery for Britvic’s stakeholders over a sustained period of time.

The proposed transaction creates an enlarged international group that 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.

The Board of Directors believe that the strategic merits of this offer are compelling, and the offer also provides shareholders with the opportunity to receive the certainty of cash consideration that reflects the current strength and medium-term prospects of the Britvic business. It also recognises the challenges of achieving an appropriate future rating and valuation for Britvic versus its historical range of trading multiples, alongside less certain long-term alignment with regard to its PepsiCo bottling business. Therefore, the Board is unanimously recommending the offer to our shareholders.”

Jacob Aarup-Andersen, CEO of Carlsberg said: “With this transaction, we are combining Britvic’s high-quality soft drinks portfolio with Carlsberg’s strong beer portfolio and route-to-market capabilities, creating an enhanced proposition across the UK and markets in Western Europe. The proposed transaction is attractive for shareholders of Carlsberg, supporting our growth ambitions and being immediately earnings accretive and value accretive in year three. We are excited about expanding our global partnership with PepsiCo and believe that the longer-term opportunities will be very beneficial for both companies.

We are pleased that the Britvic Board is unanimously recommending our offer to Britvic Shareholders. We look forward to welcoming Britvic’s employees into the Carlsberg family and creating an exciting, combined company for all employees. We are committed to accelerating commercial and supply chain investments in Britvic, and we are confident that Carlsberg Britvic will become the preferred multi-beverage supplier to customers in the UK with a comprehensive portfolio of market-leading brands.”

Silviu Popovici, CEO of PepsiCo Europe said: “We are looking forward to building on our long-standing and successful partnerships with both Carlsberg and Britvic. We believe that the combination of Carlsberg and Britvic will create even stronger sales and distribution capabilities for our winning brands in important markets. We look forward to continuing to expand the partnership into further important markets in the future.”