PepsiCo Clears Path for Carlsberg’s $3.9 Billion Britvic Bid

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Carlsberg has announced that PepsiCo has agreed to waive a clause in its bottling deal with Britvic, enhancing the British firm’s appeal as an acquisition target following a $3.9 billion bid from the Danish brewer that was previously rejected. This development could enable Carlsberg to increase its offer for Britvic, which has already turned down two proposals from the Danish company.

In response to this news, Britvic’s shares surged by as much as 10%, reaching an all-time high of 1,207 pence during early trading, while Carlsberg’s stock saw a slight decline of 0.26%.

The waived change of control clause will come into effect if Carlsberg’s acquisition of Britvic, with the endorsement of Britvic’s board, is completed. Carlsberg currently bottles Pepsi products in various markets, including Norway and Sweden. A change in control clause typically provides a party with enhanced protection if the controlling shareholding of the other party is transferred.

In 2020, Britvic entered a 20-year franchise bottling agreement with PepsiCo to bottle drinks like Pepsi, 7UP, and Mountain Dew in Britain. Carlsberg mentioned that it is still assessing its position and that there is no guarantee that a formal offer will be made. Analysts at Jefferies suggested that Carlsberg’s potential acquisition of Britvic could significantly extend its partnership with Pepsi and may also affect its current Coca-Cola bottling agreements in Denmark and Finland.

Britvic, in addition to its partnership with PepsiCo, produces a variety of non-alcoholic beverages and cocktail mixers. In the UK, it is well-known for brands such as Robinsons fruit cordial and R. White’s lemonade.

Carlsberg has until July 19 to either make a formal offer for Britvic or decide to walk away. This timeframe adds urgency to the ongoing discussions and evaluations, as both companies and their shareholders weigh the potential benefits and implications of such an acquisition.