Britvic Agrees to Carlsberg Takeover After two Declined Bids
Carlsberg, one of the world’s biggest brewing companies, has had its latest bid of £3.3bn (US$4.2bn) for UK soft drinks company Britvic approved.
Carlsberg has grown from a local brewery to a global powerhouse, employing around 41,000 people primarily in Europe and Asia, leading the company portfolio to extend far beyond its flagship Carlsberg brand.
Now encompassing over 500 local and international beers, including Tuborg, Kronenbourg, and Grimbergen, as well as ciders, soft drinks and other non-alcoholic beverages, Carlsberg has had its eye on Britvic for some time, to strengthen its position in the UK market.
The interest in Britvic stems from several strategic considerations:
Diversification beyond beer: The acquisition will allow Carlsberg to expand its presence in the non-alcoholic beverage sector, aligning with its "Accelerate SAIL" strategy announced in 2024. This strategy reflects a broader industry trend of brewers seeking growth opportunities outside their traditional beer markets.
Strengthening UK presence: Acquiring Britvic will significantly boost its overall beverage market presence in the country.
Access to valuable brands: The Britvic portfolio includes popular brands such as Robinsons, Tango, and J2O, as well as the licence to produce and distribute PepsiCo products in the UK and Ireland. This will give Carlsberg access to a diverse range of established and emerging brands.
Synergies and cost savings: The merger could potentially lead to significant synergies, particularly in distribution. Analysts at Barclays note that Britvic could switch from third-party distributors to Carlsberg's platform, potentially saving 11-12% of revenues currently spent on distribution costs.
Reducing reliance on China: The acquisition could help Carlsberg diversify its geographical footprint and reduce its dependence on the Chinese market, which has been showing signs of slowing growth.
And overall, Carlsberg says the acquisition of Britvic could create annual cost savings of around £100m (US$128m) over five years.
How will Carlsberg-Britvic deal affect wider drinks industry?
Despite the initial speculation Britvic had to agree to Carlsberg taking over, as part of the deal, Carlsberg has also secured a waiver from PepsiCo regarding the change of control clause in its bottling arrangements with Britvic, potentially smoothing the path for another future deal.
On the same day this deal was made, Carlsberg also announced that in a separate deal, it will acquire Marston’s minority stake in Carlsberg Marston’s, the company’s UK brewing business, which is now the fourth biggest beer company in the country.
The deal means that Carlsberg will take complete control of popular ales such as Brakspear, Hobgoblin, Pedigree and Wainwright.
Jacob Aarup-Andersen, the Carlsberg Chief Executive, says: “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.”
Ian Durant, the Britvic Non-Executive Chair, says: “The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors.”
Adding: “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.”
With fierce competition looming, can Carlsberg-Britvic's bold gambit redefine the UK drinks market? Only time will tell.
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