Britvic to Acquire C&C Soft Drink Business for €249
Britic said that the transaction represents an important step in the strategic development of Britvic, consolidating complementary businesses in Ireland and Northern Ireland and adding to Britvic's position in Great Britain.
14/05/07 Britvic has agreed to acquire the soft drinks and distribution businesses of C&C Group plc for €249.2m (£169.5m) in cash. CCSD owns a number of leading brands in the Republic of Ireland and Northern Ireland, including Club, Ballygowan water, Britvic, Cidona, MiWadi, and Energise Sport as well as the rights to Pepsi and 7Up brands in the territory through its bottling agreements with PepsiCo.
Commenting on the acquisition, Paul Moody, CEO of Britvic: "This is a great opportunity to accelerate earnings growth and provides us with a leading position in the soft drinks markets in both the Republic of Ireland and Northern Ireland. Additionally, there is exciting potential for supply chain synergies, brand and product expansion and innovation.”
“This is an important acquisition for Britvic as we seek to grow the business both within the UK and by selective international expansion. We are very pleased to welcome an experienced and highly capable CCSD senior management team and their colleagues. We believe we have many opportunities to further develop both CCSD's own brands and the Pepsi and 7Up brands in these markets," Moody added.
Britic said that the transaction represents an important step in the strategic development of Britvic, consolidating complementary businesses in the territory and adding to Britvic's position in Great Britain. The transaction is expected to be earnings enhancing before integration costs in the first full year, and will cover Britvic's cost of capital in the second full year.
Britvic anticipates annual pre-tax synergies of around €14m, to include the following:
• Improved revenue growth through increased focus and leveraging brand portfolio strength;
• Increased utilisation of the existing supply chain network;
• Scale benefits in direct procurement;
• System benefits driving indirect procurement savings.
The anticipated integration costs to achieve these synergies will be in the region of €20-€25m over the first three years, around half of which is estimated to be capital expenditure. One-off working capital benefits in the same period are expected total between €6-7m.
This acquisition represents the most significant step to date in Britvic's acquisition growth plans highlighted at the time of flotation in 2005. Expected to be completed before 31st August 2007, the acquisition will be funded 100% by debt, using existing debt facilities. Britvic will retain the experienced CCSD senior management team to help ensure continuity. Britvic also expects to retain all brands, subject to competition authority approval.
On an IFRS basis, for the year ended 27 February 2007, CCSD had net turnover of €269.9m and earnings before interest, taxation, depreciation and amortisation of €24.7m. Gross assets as at 27 February 2007 were €134.4m. An FRS 17 pension deficit of around €20m will also be assumed.
