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Carlsberg (OTCPK:CABGY) is being sized up by analysts after the company’s updated acquisition offer for Britvic (OTCQX:BTVCY) was accepted.
“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,” stated Carlsberg (OTCPK:CABGY) CEO Jacob Aarup-Andersen on the sector-rattling deal.
Jefferies sees upside from the creation of a single company with a leading soft drinks and beer portfolio in Great Britain, as well as the enhancement of Carlsberg’s (OTCPK:CABGY) Western European growth and cash flow profile. In addition, the deal is seen strengthening the PepsiCo (PEP) relationship, including the securement of certain long-term bottling agreements.
Analyst Kevin Mundy said the financials on the deal for Britvic (OTCQX:BTVCY) at £13.15 per share are attractive, with double-digit accretion expected in year two. “Whilst this represents a shift in the strategy away from organic top- and bottom-line growth and consistent returns to shareholders, we view it as a relatively low-risk transaction with attractive financials, and it should solve for one of Carlsberg’s toughest markets,” he noted.
Mundy and his team anticipate that Carlsberg’s (OTCPK:CABGY) shares will recover when the market digests that the transaction is relatively low risk with attractive financials.
The deal will require the backing of 75% of Britvic (OTCQX:BTVCY) investors in a shareholder vote and will be subject to regulatory clearances, including from the United Kingdom CMA and the European Union. The transaction is expected to close in Q1 of 2025.
In afternoon trading in Europe. Carlsberg (OTCPK:CABGY) rose 3.5% and Britvic (OTCQX:BTVCY) was up 4.8%. UK-based pub operator Marson’s PLC (OTCPK:MARZF) was up 13.7%. In a separate announcement, Carlsberg (OTCPK:CABGY) that it agreed to acquire Marston’s (OTCPK:MARZF) minority stake in Carlsberg Marston’s, which is the company’s brewing business in the UK.