Britvic Announces Plans to Acquire Fruité Entreprises SA
The contemplated acquisition would extend our soft drinks focus into continental Europe, would drive our already strong portfolio into new markets and would enhance our GB offering.
19 May 2010 --- The Board of Britvic plc announces that it has submitted a binding offer for the acquisition of Fruité, a leading independent soft drinks company in France for €237.0 million. The proposed acquisition of Fruité is subject to the completion of the consultation process with employee representatives which is expected to commence immediately. Following the completion of this process, Fruité will be able to enter into the formal agreement with the Company. Fruité has leading market positions in syrups and the ambient pure juice market thanks to its powerful brands Teisseire and Moulin de Valdonne, Fruité and Pressade.
The Directors expect that the contemplated acquisition would be earnings accretive in the first full year of ownership before integration costs, and would generate a return on invested capital in line with Britvic’s weighted average cost of capital in the second full year.
On completion Britvic will pay €237.0m in cash. This will be funded from existing bank facilities and the net proceeds of a Placing of up to 21.7 million ordinary shares.
Commenting, Paul Moody, Chief Executive of Britvic, said:
“With a portfolio of iconic, market-leading still brands and as France’s leading independent soft drinks company, Fruité is an excellent strategic fit for Britvic. The contemplated acquisition would extend our soft drinks focus into continental Europe, would drive our already strong portfolio into new markets and would enhance our GB offering. Our successful integration of Britvic Ireland gives us the confidence that we will deliver significant cost synergies and revenue upside, and therefore deliver material incremental value for our shareholders.”
Rationale for the Acquisition and Financial Effects
* Britvic has consistently stated that its strategy is to grow its business by investing both organically and via acquisition in areas where it can drive value from strong brands. The Directors believe that the contemplated acquisition would offer many benefits and opportunities including:
* Complementary brand portfolio
o Fruité’s strengths in dilutables (in the form of syrup) and pure juice are highly complementary to Britvic’s existing balanced portfolio of strong brands. This should provide opportunities to leverage both operational and commercial best practices from both businesses to grow Britvic’s dilutables franchise, most notably in brand management, category management and pack and price architecture
* An excellent platform for growth in Western Europe
o The contemplated transaction would provide an entry point into the attractive French soft drinks market which has a 2009 value of €12.5bn
o Within this, Fruité has grown significantly faster reflecting the strength of its brands and recent innovation. In addition, Fruité brings a strong position in Belgium and smaller footholds across a range of European countries
o Fruité has an experienced and capable management team which is expected to remain with the business and which has demonstrated a strong track record of innovation in both ambient pure juices and syrups
o Fruité’s infrastructure, comprising four manufacturing facilities, provide a platform from which to target other continental markets
* Significant cost and revenue synergies
o €10 million of cost synergies by 2013 from a number of areas including procurement and supply-chain
o €7 million of contribution from revenue synergies by 2013 through the active marketing and launch of some of Britvic’s existing iconic stills brands in France and beyond
o These synergies are expected to be delivered progressively over each of the next three years
Overview of the French Soft Drinks Market
The total French soft drinks market is significant, with a 2009 value of €12.5bn, and is skewed towards stills, with carbonates only making up around one-third of the total category.
The syrups category, which represents the largest gross revenue segment for Fruité, has enjoyed good growth over recent years, as squash has done in the UK. As a dilutable, most syrups are sold in the off-trade, though a material amount is sold in bars and restaurants to make up drinks and food.
The pure juice category, which constitutes the balance of Fruité’s business, is also extremely attractive, with a material1 growth rate over the past six years. Fruité’s juice strengths lie in ambient juice, which makes up the largest segment of the overall pure juice category.
Overview of Fruité
Fruité is a leading independent soft drink player in France with strong leadership positions in European syrups with its flagship brands Teisseire and Moulin de Valdonne, and a leading position in the ambient French pure juice market thanks to its national brands Fruité, Pressade and private label manufacturing. Complementary to these leading brand positions, Fruité has a successful business in manufacturing private label pure juice and syrups. These activities are important in providing scale and positioning as market leader across both categories and combined these private label activities represent less than half of the group's revenues and a significantly smaller proportion of overall profits"
France is the core market of Fruité, accounting for 91% of turnover in 2009. In syrups, the group is also the market leader in Belgium and exports to other European countries including the Netherlands, the UK, Denmark, Portugal, Switzerland and Spain. Fruité employed a total of over 500 full time employees as of December 2009.
Fruité’s powerful stills portfolio focuses on two syrup brands and two pure juice brands, as well as the private label market:
* Teisseire: founded in 1720, this syrup brand has very strong equity and offers expertise and trustworthiness while never compromising on quality. Thanks to a clear, distinctive identity built around values such as joy, know-how, innovation and discovery of new flavours, the brand has become part of the French gastronomic heritage. It enjoys near universal appeal in France, for example through sponsorship of the Tour De France cycling event, and holds a strong leadership position in the syrup market with a 35% category value share
* Moulin de Valdonne: founded in 1972, this major syrup brand demonstrates significant awareness as the second leading syrups brand on the market and has leading positions in the premium and organic segment.
* Fruité: founded in 1963, this pure juice brand is associated with conviviality, pleasure, trust, convenience and innovation, and the brand has grown significantly in the past decade to become a real challenger in the ambient pure juice market.
* Pressade: founded in 1983, this pure juice brand is now the undisputed leader of the ambient organic pure juice market, and has built its success around quality and authenticity.
