Carlsberg Faces Setback as Britvic Rejects £3.11 Billion Takeover Bid

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Carlsberg Faces Setback as Britvic Rejects £3.11 Billion Takeover Bid

Team FS

21/Jun/2024

Key Points:
1: Carlsberg shares drop by 8.0% following Britvic's rejection of its £3.11 billion takeover offer.
2: Britvic's stock surges by 10.8% in response to the news.
3: Carlsberg has until July 19 to make a firm offer or abandon the bid, amidst its strategy to expand beyond beer products.

Carlsberg, the Danish brewing giant, experienced its most significant single-day share decline in over four years as British soft drinks maker Britvic rejected its £3.11 billion takeover proposal. As of 10:21 a.m. London time, Carlsberg's shares were down by 8.0%, reflecting investor disappointment following Britvic's decision.

Britvic, known for brands like Robinsons and Tango, disclosed that it had declined Carlsberg's improved cash bid of 1,250 pence per share on June 17. This marked the second rejection after an earlier offer of 1,200 pence per share on June 6, with Britvic asserting that the proposals "significantly undervalue" its current and future prospects.

In response to Britvic's rejection, Carlsberg reiterated that its bid represented a compelling opportunity for Britvic shareholders to realize their investments in cash at an attractive valuation. However, Britvic's board remains firm in its stance, leaving Carlsberg to reconsider its position until the deadline of July 19, by which it must either formalize its offer or withdraw from the transaction.

Carlsberg emphasized that the potential acquisition aligned with its long-term growth strategy, which includes diversifying beyond its core portfolio of beers, lagers, and ales. Notably, its "beyond beer" products such as Somersby apple cider and Garage hard seltzer currently constitute a modest 2% of total volumes, whereas flagship brands like Tuborg and Carlsberg beer command larger market shares.

Moreover, both Carlsberg and Britvic maintain strategic partnerships with global beverage giants. Britvic holds exclusive franchise bottling rights for PepsiCo's carbonated brands in Britain, while Carlsberg operates a similar agreement with PepsiCo across several European countries. Additionally, Carlsberg serves as a bottler for Coca-Cola in Denmark and Finland, underscoring its diversified beverage production capabilities.

The unfolding scenario between Carlsberg and Britvic underscores the dynamics of the beverage industry, where strategic acquisitions and partnerships play pivotal roles in market positioning and growth strategies. As stakeholders await Carlsberg's next move, the implications of Britvic's rejection resonate across financial markets and within the broader context of corporate strategy and valuation.

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Carlsberg Faces Setback as Britvic Rejects £3.11 Billion Takeover Bid

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