British soft drinks maker Britvic has rejected a revised, unsolicited, possible cash offer from Carlsberg Group as the proposal "significantly undervalued" the group and its prospects, it said, sending its shares sharply higher.
This proposal represented a premium of more than 23% to Britvic's closing share price on Thursday, valuing the British company at about £3.11 billion (€3.68 billion).
Shares in Britvic were trading about 14% higher in early deals in London, while Carlsberg's stock was down about 5%.
Britvic's board unanimously rejected the 1,250 pence-per-share proposal from Carlsberg on June 17, it said.
This second proposal came after a previously-rejected offer on June 6, which was at a price of 1,200 pence per share.
'Current And Future Prospects'
'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,' Britvic said in a statement.
'There can be no certainty that any firm offer will be made for the company, nor as to the terms of any such offer, should one be made.'
Half-Year Results
In May, Britvic reported that its half-year revenue increased by 11.2% to £880.3 million (€1.04 billion), with a reported increase of 10.9%. Adjusted EBIT rose by 17.7% to £100.4 million (€118.7 million).
The company experienced strong consumer demand for its brands, with H1 volume growth of 4.4%. All three of its business units achieved revenue, contribution, and margin expansion, with 'standout growth' from Pepsi MAX, Ballygowan, MiWadi, Fruit Shoot, and Lipton.
Analyst Viewpoint
Commenting on the proposed takeover, AJ Bell investment director Russ Mould said, “Carlsberg is not the first company you would suggest when trying to compile a list of potential buyers for Britvic. It is known for selling beer and lager, but there have been hints it wanted to diversify. A ‘Beyond Beer’ strategy is in place and has seen the company explore other avenues such as hard seltzers. Britvic would effectively act as a springboard to accelerate that diversification and take the company into an adjacent market.
“It has already dipped its toe into the water with soft drinks such as Tuborg Squash Light and Xixia Pineapple & C. Owning Britvic would turbocharge its position in this sector.
“Drinking trends are evolving and there is a growing movement of people shunning alcohol. The rise of non-alcoholic beers, gins and wines has provided more choice and made a lot of people realise they can still enjoy a night out without getting drunk. Furthermore, younger adults don’t seem to have the thirst for loading up on booze like their parents or grandparents might have had at the same age.
“Carlsberg seems to have taken the view that it needs to diversify to protect its future and Britvic looked like a ripe opportunity potentially at a reasonable price. Two rejected approaches later, Carlsberg needs to decide how much it wants to own Britvic as it will have to dig a lot deeper to win over the board and shareholders.”
Additional reporting by ESM
