UK’s competition watchdog looks into Carlsberg-Britvic deal
Carlsberg is set to acquire Britvic for £3.3bn ($4.27bn) in a deal announced in July. The Danish beer giant will take over the Hemel Hempstead-headquartered company, creating a beverage ‘powerhouse’ across beer and soft drinks in the UK.
The CMA’s role is to investigate mergers that have the potential to lead to substantial lessening of competition. It has the power to block a merger or impose remedies to address concerns if it believes a merger is likely to reduce competition in a substantial manner.
In September, the CMA launched a preliminary invitation to comment on the Carlsberg-Britvic deal; which has now been followed by a formal enquiry. The CMA has until December 18 to decide whether to refer the merger for a phase 2 investigation.
As part of the inquiry, announced yesterday (October 23) it is inviting comments: which must be submitted by November 6.
A spokesperson for Carlsberg said: “We note the commencement of the CMA’s phase 1 investigation. This is a normal process that was expected, and we look forward to working constructively with the CMA as it progresses.
"We believe that the combination of Carlsberg’s business with Britvic will create a highly attractive multi-beverage supplier, benefitting from an efficient supply chain and distribution network, and providing customers with a portfolio of market leading brands and leading customer service."
Targeting completion in Q1 2025
Carlsberg made two attempts to acquire Britvic before raising its offer and clinching the deal in July.
Britvic shareholders gave their vote of approval in August with 99.7% of votes cast in favor of the transaction, representing a total of 83% of shareholders (75% were required to vote in favor for shareholder approval to be gained).
Carlsberg hopes that – pending regulatory clearance – the deal will close in the first quarter of 2025.
The Britvic acquisition is set to be ‘transformative’ for Carlsberg’s UK business, creating a ‘highly attractive multi-beverage supplier of scale’.
Britvic is the largest supplier of branded still soft drinks in Great Britain, and the second largest supplier of branded carbonated soft drinks. The brands include big British names such as Robinsons, Tango and J2O, but the company has also diversified into areas such as plant-based milk (Plenish) and iced coffee (Jimmy’s Iced Coffee, acquired in 2023). It also has an exclusive license with PepsiCo to make and sell brands such as Pepsi MAX, 7UP, Rockstar Energy and Lipton Ice Tea.
Revenues in 2023 reached £1.75bn, demonstrating 6.6% year-on-year growth.
In a separate deal, Carlsberg will buy Marston’s Brewing Company’s 40% stake in brewer Carlsberg Marston’s for £206m.
Carlsberg will take both the soft drink and beer businesses and combine them into a single integrated company called Carlsberg Britvic.
That will mean that the newly-created business will be able to operate across beer and soft drinks and make the most of the synergies between the two.
Both beer and soft drinks, for example, are commonly served in cans: creating an opportunity for joint procurement of cans and even the possibility to run canning for both drinks on the same line. R&D is another potential area for sharing resources: such as on sustainability and flavor development.
Carlsberg also believes it can create £100m in cost synergies over the first five years.
