Carlsberg will pay £3.3bn ($4.23bn) for the business: up from two initial offers last month that were rejected by Britvic at £2.99bn ($3.8bn) and £3.1bn ($4bn). The Britvic Board is unanimously recommending today’s offer to shareholders.
In a separate agreement, Carlsberg will acquire Marston’s 40% stake in beer business Carlsberg Marston’s Limited for £206m: helping it fully integrate its UK businesses across beer and soft drinks together.
Bringing together Carlsberg, Britvic, and PepsiCo brands
Britvic’s brands include big British names such as Robinsons, Tango and J2O; but the company has also diversified into areas such as plant-based milk (with Plenish) and iced coffee (acquiring Jimmy’s Iced Coffee in 2023).
It also has an exclusive licence with PepsiCo to make and sell brands such as Pepsi MAX, 7UP, Rockstar Energy and Lipton Ice Tea.
Its revenues in 2023 reached £1.75bn, showing 6.6% year-on-year growth.
Britvic is the largest supplier of branded still soft drinks in Great Britain, and the second largest supplier of branded carbonated soft drinks.
Carlsberg will take Britvic’s brands and business and create a single integrated beverage company in the UK called Carlsberg Britvic.
Outside the UK, Britvic is also an industry leader in Ireland with brands such as MiWadi and Ballygowan; in France with Teisseire, Pressade and Moulin de Valdonne; and in Brazil, with brands such as Maguary, Bela Ischia, Extra Power and Dufrata.
That business will have a portfolio of leading brands across both beer and soft drinks categories.
Why is the Danish brewer interested in soft drinks?
First of all, it sees soft drinks as an important part of Western European markets, supporting growth and margins.
It also identifies that the category is ‘highly synergistic with beer throughout the business value chain: from R&D (such as research into flavor combinations) to manufacturing (such as joint procurement of cans) to sales (soft drinks and beer are often purchased for the same occasion).
“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 other markets in Western Europe" - Jacob Aarup-Andersen, Carlsberg Group CEO
The Britvic acquisition is set to be ‘transformative’ for Carlsberg’s UK business, creating a ‘highly attractive multi-beverage supplier of scale, benefiting from an efficient supply chain and distribution network, and providing customers with a comprehensive portfolio of market leading brands and leading customer service’.
“Carlsberg has clear plans to increase sales and marketing investments in Britvic in order to accelerate growth and realize the full potential of the business,” says a statement from the company.
“The combined business will be able to take advantage of the highly synergistic combination between beer and soft drinks, with which Carlsberg has long experience in several markets.”
Cost synergies
Carlsberg’s acquisition of Britvic is expected to create £100m in cost synergies, with £80m to be realized by the end of year 3 and the remaining £20m by the end of year 5.
That will be complemented by the weight of PepsiCo’s brands, with Carlsberg taking over Britvic’s role as the main partner for PepsiCo in the UK and Ireland with exclusive rights to manufacture, bottle and sell brands including Pepsi, 7UP and Lipton Ice Tea.
Carlsberg Marston’s was created in 2020 by the merger of Carlsberg UK and Marston’s Brewing Company: with the venture covering brands such as Carlsberg Pilsner, Tuborg, San Miguel, Brooklyn Pilsner, Hobgoblin and Marston’s 61 Deep for retail.
Carlsberg will now take full ownership of the business: acquiring Marton’s 40% stake in Carlsberg Marston’s for £206m, conditional only on the approval of Marston’s shareholders. That transaction will facilitate full integration of Britvic and CMBC.