The National Times - Carlsberg quaffs British soft drinks maker Britvic for £3.3 bn

The announcement came little more than two weeks after the maker of the fruit drink Robinsons squash rejected a takeover approach worth £3.1 billion from Carlsberg, arguing that it significantly undervalued the firm.

"The boards of the Carlsberg Group and Britvic PLC today announced that they have reached agreement on the terms of a recommended cash offer... to acquire the entire issued and to be issued ordinary share capital of Britvic," Carlsberg said in a statement.

Britvic shareholders are being offered a 7.9 percent premium from Friday's closing price, and 36 percent from the share price one month ago.

Britvic directors were unanimously recommending the offer, which will create a single integrated beverage company to be named Carlsberg Britvic.

Britvic is the main partner for PepsiCo in Britain and Ireland with exclusive rights to manufacture and sell brands including Pepsi, 7UP, and Lipton Ice Tea.

"The Britvic acquisition will also further strengthen Carlsberg's close relationship with PepsiCo, which currently spans five markets across Western Europe and Asia," said Carlsberg, which added that PepsiCo had agreed to waive the change of control clause in the bottling arrangements it has with Britvic.

Britvic's non-executive Board Chair Ian Durant said in a statement that the proposed deal "creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors".

Carlsberg chief executive Jacob Aarup-Andersen said the deal would support the brewer's growth ambitions and would be "immediately earnings accretive and value accretive in year three".

- 'Compelling strategic merits' -

A joint statement said Carlsberg estimated that the deal could deliver annual cost savings and efficiency improvements in the region of £100 million, which it expects to be delivered over the five years following completion of the acquisition.

It said the savings were expected to be realised across a number of areas including direct and indirect procurement, supply chain, administration and overheads across Carlsberg and Britvic's combined business, but that Carlsberg was also committed to invest in Britvic's operations.

Britvic's Durant said that "the Board of Directors believe that the strategic merits of this offer are compelling" and "is unanimously recommending the offer to our shareholders."

A date for a shareholder meeting to approve the transaction has yet to be set, but the document said the companies expect the transaction, which is also subject to regulatory approvals, to go through in the first quarter of next year.

Richard Hunter, head of markets at Interactive Investor, noted that Britvic shares jumped around five percent after the announcement, but did not hit the offer price.

He said "the market reaction was muddied by an accompanying trading statement from Britvic which showed some revenue weakness."

That leaves "the door ajar for further developments on the proposed acquisition," Hunter added.

Britvic also on Monday announced that revenue increased 6.3 percent on a 2.2 percent increase in sales volumes in the April-June quarter.

"Encouragingly, this was achieved despite poor weather this year and a tough comparable from last year when revenue increased 9.9 percent," the company's chief executive Simon Litherland said in a statement.

M.Davis--TNT