Competition watchdog takes interest in Carlsberg-Britvic merger
The competition watchdog announced this morning that it had opened the first stages of an investigation into the tie-up between Carlsberg and rival drinks brand Britvic.
Danish brewing giant Carlsberg agreed to acquire the British soft drinks maker for £3.3bn in July, in a significant push into the UK non-alcoholic drinks market.
The CMA has opened invitations to comment on the merger in advance of any decision to launch a Phase 1 investigation formally.
The CMA has issued a preliminary ‘invitation to comment’ to allow interested parties to submit their initial views on the transaction’s potential impact on competition in the UK.
This invitation to comment is the first part of the CMA’s “information-gathering process” around the deal.
Carlsberg’s swoop for Britvic has formed part of “beyond beer” strategy, launched in 2022.
The plan involved expanding into soft drinks, cider and alcohol-free beer markets.
Carlsberg said the deal would build on its successful bottling business in the Nordic region and strengthen its footprint in Western Europe.
“The proposed transaction creates an enlarged international group that is well-placed to capture the growth opportunities in multiple drinks sectors,” Ian Durant, non-executive chair of Britvic, said at the time.
Analysts at Peel Hunt said the two deals showed Carlsberg was making “a large play in the UK market” and that the group would have “significant distribution power”.
Britvic, which owns Robinsons, J20, and Fruit Shoot, had previously rebuffed two bids from Carlsberg on claims the company had been undervalued.
Britvic rejected Carlsberg’s offers of £12 and £12.50 per share in June. The successful offer was made at £12.90 per share in July, including a 25p-per-share ‘special dividend payment’.
Shares in Britvic have risen by nearly 50 per cent in the last six months, including a post-deal bump. Shares in Carlsberg have fallen by nearly 20 per cent over the same time frame.
Consumers in the UK have been increasingly turning to non-alcoholic drinks, with a particular push from the younger generations.
In May, Britvic reported a strong six months thanks to the strength of Lipton Ice Tea, with the canned version’s launch bumping the brand’s revenue up 27.6 per cent.
A spokesperson for Carlsberg said: “We believe that the combination of Carlsberg’s business with Britvic will create a highly attractive multi-beverage supplier, benefitting from an efficient supply chain and distribution network, and providing customers with a portfolio of market leading brands and leading customer service.
The CMA’s invitation to comment is a standard step in its review of the transaction and was always fully expected. Following approval from Britvic’s shareholders last month, and subject to regulatory approvals and other outstanding conditions being satisfied, the transaction is expected to complete by the first quarter of 2025.”