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Britvic plc (BVIC)

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Tuesday 18 May, 2010

Britvic plc

Proposed Acquisition of Fruit

RNS Number : 0864M
Britvic plc
18 May 2010

18 May 2010

BRITVIC plc ("the Company", "Britvic")

Proposed Acquisition of Fruité Entreprises SA  ("Fruité") for €237.0m


·              The Board of Britvic plc announces today 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

·     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

·    The contemplated transaction would provide an entry point into the attractive French soft drinks market which has a 2009 value of €12.5bn

·    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

·    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

·    Fruité's infrastructure, comprising four manufacturing facilities, provide a platform from which to target other continental markets

·      Significant cost and revenue synergies

·     €10 million of cost synergies by 2013 from a number of areas including procurement and supply-chain

·     €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

·     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.

5 per cent.

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.

Overview of Financials and Outlook

Fruité management have transformed the profile and profitability of the group and its brands over the course of the last few years reflecting their focus on driving volumes, prices and innovation.

Revenues for the year to 31st December 2009 amounted to €256.3m, a 10.6% CAGR for the period 2007-2009. EBITDA and EBIT were also up strongly at €24.8m and €19.7m respectively, though we anticipate that a sustainable growth rate will be more in line with the Britvic group top line over the longer term.

Principal Terms of the Contemplated Acquisition

Under the terms of the sale and purchase agreement the consideration payable for Fruité is €237.0m in cash. The EV/EBITDA multiple is 9.6, though the post-synergy multiple after achievement costs is approximately 6.4.


The cash consideration will be funded from existing borrowing arrangements and the proceeds of a placing of up to 21.7 million ordinary shares. The Directors believe that this consideration mix is prudent and consistent with achieving a net debt to EBITDA ratio of below three times on a full, end of year basis.

Financial Advisers

Nomura International plc and BNP Paribas SA acted as financial advisers to Britvic plc.

Nomura International plc

BNP Paribas SA

Michael MacKinnon

Björn de Carro

Managing Director

Managing Director


Tel: +44 207 102 4665

Tel: +33 1 42 98 17 72


There will be a live-webcast of the interims and contemplated acquisition presentation given today at 11.15am by Paul Moody (Chief Executive) and John Gibney (Group Finance Director). The webcast will be available at, with a transcript available in due course. There will also be a conference call today at 2.30pm (9.30am Eastern Standard Time) for investors and analysts, with an opportunity to ask questions.

UK Access Number

+ 44 (0)20 7075 1520

UK Toll Free

0808 238 7320

Pin Number



A recording of the call will be available for seven days.


UK Toll Access Number

+44 (0)20 3364 5943

UK Toll Free Access Number

0808 238 9699

US Toll Free Access Number

1 866 286 6997

Conference References



For further information please contact:



Craig Marks

+44 (0)1245 504 330



Marisa Fitch

+44 (0)7808 098 292

Tom Buchanan/Giles Croot (Brunswick)

+44 (0)20 7404 5959


Britvic is one of the two leading branded soft drinks businesses in the UK and the Republic of Ireland. The Company is the largest supplier of branded still soft drinks in Great Britain, and the number two supplier of branded carbonates. Britvic's broad portfolio of leading brands includes established names with high brand recognition such as Robinsons, Tango, Drench, J2O and Fruit Shoot. Included within the portfolio are the PepsiCo brands which Britvic produces, markets, sells and distributes under its exclusive appointments from PepsiCo. This brand and product portfolio enables Britvic to target and satisfy a wide range of consumer demands in all major soft drinks categories, via all available routes to market.


Britvic's M&A strategy has focussed on acquiring soft drinks businesses in two areas:

1)   Stills brands and operations in European markets where the new infrastructure will allow Britvic to drive its brands into that market and vice-versa, whilst realising material cost synergies.


2)   The carbonated soft drinks market in Northern and Western Europe, broadly (but not limited to) the Pepsi franchise infrastructure where Britvic can realise significant cost synergies and potentially drive accelerated revenue growth.


The securities mentioned herein (the "Securities") have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities Act") and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act. There will be no public offer of the Securities in the United States.


This announcement contains (or may contain) certain forward-looking statements with respect to certain of Britvic's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. Britvic cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate'', "target", "expect", "estimate", "intend", "plan'; "goal'; "believe", or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding Britvic's future financial position, income growth, impairment charges, business strategy, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditure, and plans, dividend growth and objectives for future operations of Britvic and other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under International Financial Reporting Standards ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future acquisitions and other strategic transactions and the impact of competition - a number of which factors are beyond Britvic's control. As a result, Britvic's actual future results may differ materially from the plans, goals, and expectations set forth in Britvic's forward-looking statements. Any forward-looking statements made herein by or on behalf of Britvic speak only as of the date they are made. Except as required by the Financial Services Authority, the London Stock Exchange or applicable law, Britvic expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in Britvic's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

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