Moody has insisted that its view about the Fruité business is very different

Moody has insisted that its view about the Fruité business is very different

Britvic CEO Paul Moody has brushed off concerns that its acquisition deal has been made against an uncertain economic backdrop, similar to its C&C buy.

The firm this morning (18 May) said it has submitted a binding offer to acquire independent French soft drinks maker Fruité for EUR237m (US$294m).

Britvic said the deal will provide it with an entry point into the attractive French soft drinks market, which had a value of EUR12.5bn in 2009.

The firm’s last buy in 2007 was C&C Group's Irish soft drinks operations, which has since floundered, with sales and volumes continuing to plunge ever since. Revenue was down 11.3% to GBP89.7m in the 28 weeks to 11 April.

However, Moody has insisted that its view about the Fruité business is very different.

“There’s no doubt that the time we bought the business in Ireland, nobody least of all us predicted the economic downturn that we all then suffered, so we’ve been managing the business against a kind of generational economic downturn,” Moody told Cantos.

“What we focused on in Ireland is transferring our capability, building the business and its brands, and driving against the synergy case that we declared at the outset. Our view about the business in France is very different, the French economy is coming out of recession…and as we look specifically at the soft drinks market in France, it’s showing good growth…so circumstances are very different and we believe the opportunity to drive the business in France is very clear,” Moody said.

He added that buying in France makes good sense.

“The business has a market leading brand in Teisseire, it is the market leading syrup brand and with Robinsons we operate in squash so we pretty much understand the market. Together with that they have a very strong infrastructure, in manufacturing and also sales, so we’re pretty confident that we can bring some of our brands into the French market as well as their own brands, so it’s really perfect strategic fit for Britvic,” Moody said.

Evolution Securities analyst Andrew Holland believes that the industry had expected another Pepsi buy from the firm.

“Once we recovered from that particular shock and look at this deal on it’s own merits, I think it stacks up really well,” Holland said.

“I think they see it as a sufficiently similar brand and brand positioning to Robinsons for them to feel very comfortable with it and it’s relatively unexploited in terms of what they’ve been doing recently with Robinsons.”

He added that Britvic may now take some time out before considering another deal, but that there are certainly deals to be done.

“They will look in the same places, North and Western Europe, and at other Pepsi bottlers,” Holland said. “If this one shapes up well, they may be involved in doing other similar deals. The problem is, most of us are unfamiliar with domestic squash type brands, but my guess is there is more out there and maybe they can use this as a springbok to further acquisitions.”

Britvic this morning delivered double digit profits growth in what it described as a tough half-year period.