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Carlsberg shares plunge after Britvic rejects $3.9 billion takeover bid

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Shares of Carlsberg experienced their most significant single-day decline in more than four years on Friday, following the announcement that British soft drinks maker Britvic had rejected the Danish brewer’s £3.11 billion ($3.9 billion) takeover proposal.

The refusal sent Carlsberg shares tumbling by 8.0% as of 10:21 a.m. BST, according to LSEG data, marking the company’s largest single-day share drop since March 12, 2020, when the stock fell 8.77%.

Britvic’s surge and the rejected proposal

Conversely, Britvic’s shares surged by 10.8% following the news of the rejection. Earlier in the session, Britvic disclosed that it had turned down an improved cash takeover bid from Carlsberg on June 17, which offered 1,250 pence per share.

The British soft drinks maker stated that the proposal “significantly undervalues Britvic, and its current and future prospects.” This was Carlsberg’s second attempt, after a previous offer of 1,200 pence per share on June 6 was also declined.

Carlsberg’s response and strategic considerations

Carlsberg confirmed the rejection of its second proposal, describing it as “a compelling opportunity for Britvic shareholders to realise their investment in full in cash at an attractive valuation.”

The Danish brewer indicated it would be considering its position, with a deadline of July 19 to make a firm offer or withdraw from the transaction.

The potential acquisition aligns with Carlsberg’s long-term growth strategy, which was outlined earlier this year. The strategy emphasizes expanding beyond its core portfolio of beers, lagers, and ales.

Currently, the company’s “beyond beer” products, including the Somersby apple cider and Garage hard seltzer brands, account for just 2% of its total volumes.

In contrast, Tuborg, Carlsberg’s largest brand, represents roughly 15% of total volumes, while the flagship Carlsberg beer constitutes 10%.

Britvic’s strategic position and market impact

Britvic, known for its British staple brands like Robinson Squash and Tango soft drink, holds exclusive 20-year franchise bottling rights in Britain for the carbonated brands of U.S. food and beverages giant PepsiCo, under an agreement made in October 2020.

Carlsberg has a similar relationship with PepsiCo in Norway, Sweden, Switzerland, Cambodia, and Laos, and also bottles Coca-Cola products in Denmark and Finland.

The rejection of Carlsberg’s proposal reflects Britvic’s confidence in its current and future market prospects.

The takeover bid highlighted the competitive and dynamic nature of the beverage industry, where strategic acquisitions are a pathway for growth and market expansion.

Market reactions and future implications

The market’s reaction to Britvic’s rejection of Carlsberg’s proposal underscores the significant impact such corporate maneuvers can have on stock performance.

Carlsberg’s notable share decline reflects investor concerns about the implications of the failed acquisition, while Britvic’s surge indicates market confidence in its standalone growth potential.

As Carlsberg reassesses its position, the coming weeks will be critical in determining the future course of action. The deadline of July 19 will keep investors and industry watchers on high alert for any developments.

This period will also allow both companies to strategize and possibly reconsider their approaches in light of the market’s response.

The unfolding scenario between Carlsberg and Britvic highlights the complexities and strategic calculations involved in major corporate acquisitions.

With Carlsberg’s shares plummeting and Britvic’s surging, the market dynamics are set to evolve as the July 19 deadline approaches.

Both companies must navigate this period with careful consideration of their long-term strategic goals and market positioning.

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