Robinsons bottles on a supermarket shelf
Britvic, whose brands include Robinsons and Tango, probably looked like a ripe opportunity at a reasonable price / Image source: Adobe
  • Offers at £12 and £12.50 rejected
  • Robinsons maker’s shares surge on bid excitement
  • Carlsberg ‘considering its position’

Soft drinks business Britvic (BVIC) was the FTSE 250’s biggest gainer on Friday, with shares in the Fruit Shoot-to-J2O maker fizzing 11% higher to £11.29 on news it has rebuffed two takeover approaches from Carlsberg (CARL-B:CPH).

The Danish brewer sweetened its original £12 per share offer to £12.50 on 11 June 2024, a proposal valuing Britvic at around £3.1 billion that represented a near-30% premium to the undisturbed share price.

However, this raised offer was unanimously rejected by the board on 17 June on the basis it ‘significantly undervalues Britvic, and its current and future prospects’.

Beer and lager giant Carlsberg is probably not the first company that springs to mind when compiling a list of potential buyers for soft drinks maker Britvic, but the brewer has clearly taken the view it needs to diversify to protect its future.

Britvic, whose enviable brand portfolio includes Robinsons and Tango and which also makes Pepsi and 7UP for US drinks giant PepsiCo (PEP:NASDAQ), looked like a ripe opportunity potentially at a reasonable price.


Carlsberg still believes a takeover 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’.

The predator is now considering its position following the two rejected approaches and needs to decide how much it wants to own Britvic, since it will have to dig a lot deeper to win over the board and shareholders.

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As for Britvic, it said it will ‘consider any further proposal on its merits’, yet remains ‘confident’ in its current and future prospects as a standalone having served up a 12.8% rise in pre-tax profit to £78.2 million for the half ended 31 March as revenues bubbled up 11.2% to £880.3 million.

Beneficiaries of today’s share price surge include the likes of Schroder UK Mid Cap Fund (SCP), which had 3.1% of its portfolio in Britvic at last count and is the only investment trust with 1% or more in the stock.

In the open-ended funds universe, VT Downing Small & Mid-Cap Income (B61JRG2) has 3.65% of its portfolio invested in Britvic, according to Fe Fundinfo.


Russ Mould, AJ Bell investment director, commented: ‘Britvic believes its products are probably the best soft drinks in the world because it is not letting Carlsberg rock up and buy the company on the cheap.

‘Trading on just 15 times earnings before revealing the bid approach, Britvic is a classic example of a company that quietly got on with the job. There was no glamour around its products, investors didn’t hype up the stock, and it sat quietly on the UK market slowly growing sales and revenue. Often, it’s only when something is taken away that you miss it, and investors might take that view if Britvic was gobbled up and delisted.’

While Carlsberg is known for selling beer and lager, Mould said there have been hints it wants to diversify. A ‘Beyond Beer’ strategy is in place that has seen the company explore other avenues such as hard seltzers.

‘Britvic would effectively act as a springboard to accelerate that diversification and take the company into an adjacent market,’ added Mould.

Carlsberg has ‘already dipped its toe into the water with soft drinks such as Tuborg Squash Light and Xixia Pineapple & C. Owning Britvic would turbocharge its position in this sector.’

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.


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Issue Date: 21 Jun 2024