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Soft drinks player Britvic has announced it has rejected two takeover approaches from brewing giant Carlsberg.
It received an unsolicited proposal from Carlsberg for a cash offer on 11 June to acquire the entire company for 1,250p per share, which would value Britvic at around £3.1bn.
The Britvic board together with its advisers “carefully considered the proposal”, and concluded that it “significantly undervalues Britvic, and its current and future prospects”.
Accordingly, Britvic’s board unanimously rejected the bid on 17 June 2024.
The proposal was Carlsberg’s second bid for the group having initially had a 1,200p bid on 6 June knocked back.
Britvic’s board said it remains confident in the current and future prospects of Britvic.
However, it said it recognises its fiduciary duties and will consider any further proposal on its merits.
Carlsberg this morning said it believes its bid represents a “compelling opportunity for Britvic shareholders to realise their investment in full in cash at an attractive valuation”.
It points out the 1,250p bid is a 13.1 times multiple of Britvic’s adjusted EBITDA and represents a 29% premium on its share price of 970p on 19 June.
Carlsberg said it believes that the potential transaction would enable it to “capture appealing long-term growth opportunities from Britvic’s comprehensive portfolio of leading brands in an attractive segment of the beverage market where Carlsberg already has a strong track record”.
Carlsberg is now “considering its position”.
Any offer, if made, is likely to be solely in cash and is expected to be fully debt financed.
Britvic shares have jumped 12.3% to an all-time high of 1,140p on the news.
Morning update
Retail sales volumes rose by 2.9% in May 2024, following a fall of 1.8% in April 2024, according to the Office of National Statistics.
Sales volumes rose across most sectors, with clothing retailers and furniture stores rebounding following poor weather in April.
More broadly, sales volumes rose by 1.0% in the three months to May 2024 when compared with the previous three months.
However, they fell by 0.2% when compared with the three months to May 2023.
Non-food stores sales volumes (the total of department, clothing, household, and other non-food stores) rose by 3.5% in May 2024.
This was the largest monthly rise since April 2021, and follows a fall of 3.0% in April 2024. Within non-food stores, there was strong monthly growth for clothing and footwear retailers, furniture stores, and sports equipment, games and toys stores.
These retailers reported improved footfall, better weather, and the impact of promotions.
Food stores were up a more modest 1.2%.
Elsehwere this morning, UK consumer confidence continues to grow as people become more optimistic about the direction of the economy, according to GFK’s monthly consumer confidence figures.
GFK’s consumer confidence index increased three points to -14 in June.
The index measuring changes in personal finances during the last year is unchanged at -10, while the forecast for personal finances over the next 12 months is down three points at +4.
However, the measure for the general economic situation of the country during the last 12 months is up seven points at -32; this is 22 points higher than in June 2023.
Expectations for the general economic situation over the next 12 months have also increased by six points to -11, which is now 14 points better than June 2023.
Joe Staton, Client Strategy Director GfK, says: “Once again we have an improved reading for the Overall Index Score with June showing a three-point improvement bolstered by consumers’ more sympathetic view of the economy for the last year and the 12 months to come.
“Those measures on the economy registered sharp increases of seven points and six points respectively, and there was a welcome three-point boost in intentions to make major purchases. While June’s reading of -14 is the third month in a row that confidence has increased, the headline score remains negative owing to the difficulties so many have experienced as the unrelenting cost-of-living crisis batters household budgets.
“Nevertheless, consumer confidence continues its robust long-term upward trend this month, and has recovered significantly since the record low of -49 reached in September 2022. Consumers like financial certainty, and this has to be the cornerstone if we are to see confidence break out into positive territory.”
On the markets this morning, the FTSE 100 is down 0.3% to 8,249.4pts.
Other than Britvic risers include AG Barr, up 4.4% to 622p, FeverTree, up 3.7% to 1,060.3p and Ocado, up 3.5% to 320.8p.
Fallers include B&M European Value Retail, down 1.7% to 469p, Sainsbury’s, down 0.7% to 263.2p and Tesco, down 0.6% to 307.1p.
Yesterday in the City
The FTSE 100 jumped 0.8% yesterday to close at 8,272.4pts, buoyed by the Bank of England mooting an August interest rate cut despite holding rates on Thursday.
Investors gave Tate & Lyle’s £1.4bn CP Kelco acquisition a cold reception, with the firm’s shares dropping 9.1% back to 615.5p on the news of the major deal.
DS Smith rose 2.8% to 362p despite posting a sharp drop in sales, amid more positive recent performance and outlook.
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