If Britvic’s the answer, what’s the question?
Brokers at RBC Capital Markets posed this stumper in an analysis piece on Carlsberg’s leftfield takeover bid for the Pepsi and Robinson’s producer.
Both parties have agreed to Carlsberg’s cash offer that places £3.3 billion valuation on FTSE 250-listed Britvic, or £4.1 billion when including debt.
“We’re still a little mystified,” said RBC. “True, there will be synergies from the Britvic combination, and Carlsberg is not overpaying, but the UK beer market will remain intensely competitive.”
Analysts added: “Perhaps the explanation lies, at least partly, with the scars resulting from Carlsberg's enforced exit from Russia and a desire to increase exposure to stable, if uninspiring, developed markets.”
Financially ‘OK’ yet operationally oddball, seemed be RBC’s general take on the matter.
The bank noted that consensus revenue growth targets on Britvic fall short of Carlsberg’s 4-6% target, “suggesting that revenue synergies could be needed merely to prevent Britvic being a drag”.
“Judging by Carlsberg's share price reaction (down 7% since the possibility of the Britvic acquisition first became public), we're not the only ones to have been unpersuaded, at least Initially,” added RBC.
Analysts reduced Carlsberg’s from 970 Danish krona to 890 krona with a ‘sector perform’ stock rating.