Britvic rejects sweetened takeover Carlsberg proposal

Soft drinks maker Britvic has rejected a £3.11 billion takeover proposal from Carlsberg Group, the companies said today, the second approach from the Danish brewer it has turned down.

Shares in London-listed Britvic, which sells cocktail mixers and other non-alcoholic drinks, jumped 14% to 1,153 pence, while Carlsberg’s stock fell about 8%.

Carlsberg is looking to expand its focus on categories including cider, hard lemonade, hard seltzers and ready-to-drink cocktails as it sees rising consumer interest in beverages outside the traditional beer category.

“Britvic will be a major takeover, and at the same time, such a large takeover could have implications for their dividend and share buyback capacity,” Nordnet analyst Per Hansen said, commenting on why Carlsberg’s shares were down.

The Danish company said it was weighing its options after Britvic rejected two proposals it had put forth. It added that any formal offer, if made, would be in cash and fully financed through debt.

Carlsberg has until July 19 to make a firm offer for Britvic or walk away.

All major brewers are looking to expand into new products in the face of long-term decline in some markets, with some drinkers switching to spirits or cutting back on alcohol consumption altogether.

Carlsberg’s “beyond beer” portfolio, including Somersby cider and Garage hard seltzer brands, accounted for only 2% of total volumes in February 2024.

The company has said it plans to boost growth in this category by expanding its portfolio.

Rival Anheuser-Busch InBev has started selling canned cocktails, while Heineken is also expanding into cider and hard seltzer.

Other London-listed soft drinks makers such as Irn Bru maker AG Barr and tonic maker Fevertree were up 3.5% and 5%, respectively.

Carlsberg’s latest proposed price of 1,250 pence per Britvic share represented a premium of more than 23% to Britvic’s closing share price yesterday, and was up from an earlier proposal of 1,200 pence.

The firm’s shares were trading below the proposed offer price, indicating that investors are uncertain about a potential deal.

Britvic sells its drinks in Britain, Ireland, Brazil and other international markets such as France, Middle East and Asia.

Britvic’s brands here include Ballygowan, MiWadi, Club, Cidona, TK and Fruit Shoot. In the UK, its famous brands include Robinsons fruit cordial and R White’s lemonade. It also bottles Pepsi drinks there.

Carlsberg, which also bottles Pepsi drinks in some markets, sells other beverages including energy and soft drinks and non-alcoholic beer.

Drinks other than beer made up around 19% of volumes in its most recent financial year.