Blog: Britvic in French gamble?

Michelle Russell | 21 May 2010

Analyst predictions last month that UK soft drinks firm Britvic would benefit “strongly” from an acquisition in Europe may indeed prove true.

In April, Eveline Varin and Michael Steib of Morgan Stanley said they saw “strong upside potential” coming from the improved fundamentals and from possible expansion in Europe.

Indeed, Britvic this week announced it had submitted a binding offer to acquire independent French soft drinks maker Fruité for EUR237m (US$294m).

However, given Britvic’s strong track record in the UK with the Pepsi brands, Varin and Steib said they believe the firm might have been in a good position to acquire an independent bottler of Pepsi products in Europe, and roll out PepsiCo’s - and its own - brand portfolio.

Evolution Securities analyst Andew Wood also said back in February that the Tango maker was most likely to be looking at Northern Europe, particularly for Pepsi bottlers.

The disappointment that the deal wasn’t a Pepsi bottler may have been reflected in the firm’s share price, which slid 4.5% on the news.

Investors may have been concerned that the deal may have a similar outcome to Britvic’s purchase of C&C.

Of course, shareholders will be hoping that Britvic’s latest purchase will prove better than its last. CEO Paul Moody has spent this week brushing off concerns that the acquisition has been made against an uncertain economic backdrop, similar to its C&C buy.

The Irish arm saw revenues drop 11.3% to GBP89.7m in the 28 weeks to 11 April.

Shares however, quickly recovered on Tuesday, suggested investors are willing to give Britvic the benefit of the doubt.

Only time will tell if, indeed, as Moody says, buying in France makes good sense.


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