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Britvic (BVIC) has agreed a £54.5m deal to further grow its presence in Brazil with the acquisition of Bela Ischia Alimentos juice and concentrates business.
The R$218m deal will be funded from existing debt facilities and builds on its acquisition of Empresa Brasileira de Bebidas e Alimentos and the leading liquid concentrate brands Maguary and Dafruta in Brazil agreed in September 2015.
Britvic said in a statement the deal will create substantial annual cost synergies from efficiencies in procurement, production, logistics and administration and it expects it to drive a profit within its first full year.
“Bela Ischia is a strong and well recognised consumer brand with its largest presence in the key areas of Rio de Janeiro and Minas Gerais,” Britvic stated. “Its acquisition both strengthens Britvic’s brand portfolio in Brazil and creates a broader regional footprint by complementing the existing ebba strengths in Sao Paulo and the north east.”
It added that its existing Brazilian business has “delivered excellent results in its first year against challenging macro conditions”.
In the last 12 months, Bela Ischia delivered double digit revenue growth, reaching approximately R$160m resulting in EBITDA of approximately R$18.5m, reflecting strong volume and price growth. Revenues in its existing Ebba business were R$471m in Britvic’s 2016 financial year.
“The consolidation of liquid concentrates and RTD juice will allow Britvic to strengthen its competitive offer, in particular against the larger powders brands.”
CEO Simon Litherland said: “The proposed acquisition of Bela Ischia represents an exciting opportunity to build on our very strong first year in Brazil with further expansion of our presence in a large and growing soft drinks market. Bela Ischia operates in a category where Britvic has proven capability of generating growth, launching new products and establishing brand leadership and is an excellent complementary fit with our existing business.
“Our due diligence to date has identified significant cost synergies and potential further revenue benefits arising from a broader brand portfolio and geographical presence. As a result, we are confident that this complementary acquisition should create a fantastic platform to consolidate our strategic position in Brazil and generate additional shareholder value over the coming years.”
Britvic shares are up 1.7% to 576.5p so far in morning trading.
Morning update
More news hitting the market on the City’s first day back of 2017 is the departure of the CEO of Benecol owner Raisio.
Matti Rihko has resigned from his position on 3 January 2017 with immediate effect. He has been Raisio’s CEO since November 2006 and Raisio will immediately begin a search for his successor. Jarmo Puputti has been installed as Raisio’s interim CEO and he will continue to serve as Raisioagro’s managing director. Jarmo Puputti’s CV is available on Raisio’s website at www.raisio.com.
Matti Perkonoja, chairman, said: “The Board of Directors wants to thank Matti Rihko for his ten years’ term and his excellent work for Raisio’s renovation and internationalisation. Since 2006 Raisio shareholders have nearly tripled the value of their investment due to the share price increase and the nine years of increased dividends. We wish Matti Rihko the best of success in his future endeavours.”
On the markets this morning, the FTSE is continuing the strong momentum it had at the end of 2016, rising another 0.7% to 7,191.4pts.
As well as Britiv, early risers include Hotel Chocolat (HOTC), up 2.9% to 296.8p, PZ Cussons (PZC), up 2.4% to 342.2p and Finsbury Food Group (FIF), up 1.7% to 122p,
Early fallers include Marks & Spencer (MKS), down 1.2% to 345.9p, Tesco (TSCO), down 0.9% to 204.9p, Stock Spirits (STCK), down 1.4% to 178.3p and McColl’s (MCLS), down 1.4% to 183.5p.
This week in the City
The plethora of Christmas trading updates will start appearing this week with clothing bellwether Next (NXT) on Wednesday and John Lewis also expected to announce Christmas figures, but this week is rather light on scheduled updates until Morrisons (MRW) kicks off a wave of grocery market updates on 10th January.
The only notable items in the diary currently look like a first quarter earnings release from Walgreens Boots Alliance (WBA) on Thursday and a similar update from agriculture giant Monsanto (MON) on the same day.
In terms of economic announcements, the monthly BRC Shop Price Index will be out first thing on tomorrow.
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