Glenboden M & A Originations

Britvic boosts international credibility with CCSD acquisition in Ireland

Priority Rating priority rating 4
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Origination Status business unit acquisition agreement announced, May 2007
Asset CCSD (Ireland), no.2 domestic branded soft drinks producer
Buyer Britvic plc, no.2 soft drinks producer in UK market
Seller C&C Group plc, leading alcohol beverages producer and distributor in Ireland
Buyer Rationale selective international expansion, synergy potential
Seller Rationale acceptable valuation, group financial issues
NBs CCSD is the Pepsico franchisee in Ireland, as is Britvic in the UK
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So, even Britvic has entered the M&A fray this cycle; earlier their international expansion appeared to be limited to modest brand licencing agreements. Having said that, Ireland is not exactly terra incognita, and CCSD looks very much like a ‘parallel business’ to Britvic in terms of portfolio, market position and long-term relationship as bottler and distributor for Pepsico’s brands. This deal begs the question of whether Britvic can emerge as a credible acquisition candidate, or whether the importance of the Pepsico franchise, in its portfolio, weighs is down too much for that.

The valuation seems quite reasonable for both parties. On the down side, much of the business is based on the Pepsico franchise, i.e. has no brand equity value, and the growth potential of the Irish market is limited (it already has the highest per capita consumption of CSDs in Europe). On the up side, the portfolio includes Ballygowan, Ireland’s no.1 water brand in a fast-growing water market, and substantial synergies are expected from the deal (estimated by Britvic at €14 mln per annum).

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THIS LEAD'S VALUATION
Size (€ mln) 250
Sector soft drinks
Asset Quality Ireland no.2 branded
Seller mid-cap plc
Buyer mid-cap plc
P/S 0,9
P/Ebitda 10,0
Type total consideration
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