Pepsi waives contract clause to smooth the way for Carlsberg to takeover Britvic

Last week, Britvic rejected two takeover offers from Carlsberg. 

Danish drinks company Carlsberg has secured the agreement of PepsiCo for a potential £3.1bn (€3.65bn) takeover of the UK soft drinks manufacturer Britvic.

Britvic, which makes brands such as Ballygowan and MiWadi, is the UK bottler for PepsiCo. The US soft drinks company has waived a change-of-control clause it has in its contract with Britvic, potentially smoothing the way for a takeover.

Last week, Britvic rejected two unsolicited takeover bids from Carlsberg. Britvic said the offers significantly undervalued the company and its prospects.

Britvic shares surged as much as 10% in early trading in London on Monday.

PepsiCo’s deal with Britvic includes a change-of-control clause, which typically allows for such an agreement to be terminated should a change the ownership of a company change. It would provide an added complication to Carlsberg, or any buyer.

However, Carlsberg, which already has a bottling relationship with PepsiCo in five countries including Norway and Sweden, said the waiver with PepsiCo would come into effect should the deal proceed.

The Danish brewer said in a statement on Friday that its interest in Britvic is in line with its strategy, announced in February, which includes expanding beyond beer. Brands such as Somersby cider and Garage hard seltzers account for 2% of its volumes.

Big brewers are facing a long-term fall in demand as consumers continue to switch to spirits or choose to drink less alcohol.

Carlsberg’s shares have fallen by more than 10% since its bid interest was confirmed on Friday with company saying it’s considering its next steps. It has until July 19 to make a formal offer or walk away under UK takeover rules.

Bloomberg