Denmark's Carlsberg agrees to acquire British drinks maker Britvic

Danish brewery group Carlsberg and Britvic, a British producer of soft drinks, on Monday said they have agreed on the terms whereby Carlsberg's unit Carlsberg UK Holdings Limited will acquire Britvic for an enterprise value of about £4.1 billion ($5.2 billion) to be paid in cash.

The acquisition values at nearly £3.3 billion on a fully diluted basis.

Carlsberg plans to create a single beverage company in the UK, to be named Carlsberg Britvic. The company intends 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 said in a statement.

The purchase price represents a premium of 36% to the closing price of Britvic Shares of 970 pence per share on June 19, 2024, the day prior to the speculation of a possible offer.

The acquisition value represents approximately 13.6 times Britvic's adjusted earnings before interest, taxes, depreciation, and amortization or adjusted EBITDA of £303 million for the 12 month period ended March 31, 2024.

As per the agreement, Britvic Shareholders will receive 1,315 pence per share, including 1,290 pence per share in cash plus a special dividend of 25 pence per share, to be paid by Britvic.

The acquisition is expected to add to adjusted EPS by mid-single-digit percentages in the first year after completion of the acquisition, and by double-digit percentages in year two.

As per the preliminary estimate, the business combination is expected to deliver annual cost savings and efficiency improvements by about £75 million, after tax, over a period of five years.