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Soft drinks bottler Refresco (RFRG) has accepted a €1.6bn (£1.4bn) takeover offer from a consortium of private equity giant PAI Partners and Canadian institutional investor British Columbia Investment Management Corporation (bcIMC).

The Amsterdam-listed group turned down a €1.4bn (£1.2bn) offer from PAI in April, with the PE firm coming back with a improved, unsolicited bid, offering €19.75 a share for Refresco earlier this month.

This morning, a joint announcement by PAI, bcIMC and Refresco said the three had reached a conditional agreement on a recommended, fully funded, public offer by the consortium at an offer price of €20 in cash per share.

It represents a premium of 22% to the average share price, a premium of approximately 41% to the April price, and 38% higher than the Refresco IPO price.

The offer price values 100% of the shares at €1.62bn and equates to an enterprise value of approximately €3.3bn.

PAI and bcIMC said they ‘fully supported’ Refresco’s buy-and-build strategy going forward, including the completion of the $1.3bn (£1bn) acquisition of Cott’s bottling activities, which Refresco agreed to buy in July.

Shares in Refresco are up 2.4% so far today to €19.77 and up 16% since the new offer was made in early October.


PAI managing partner Frédéric Stévenin added: “Refresco is a high-quality business and an attractive consolidation platform in the beverage industry which we intend to fully support using PAI’s wealth of experience in the European food and beverage industry.

“We share the Refresco management team’s overall vision for the group and we are excited by the opportunity to work with them and the team at bcIMC to realise its potential.”

Refresco CEO Hans Roelofs said the offer represented fair value for shareholders and was another milestone for the company.

“Obtaining a public listing in 2015 was a well-considered decision and it has brought the company many opportunities,” he added.

“However, we have also grown and prospered under private equity ownership. Our ownership structure is never a goal in itself. Rather, our focus remains on being in an environment that allows us to continue executing our proven strategy of buy-and-build.

“The first time PAI approached us was prior to our public listing in 2015. They have always been impressed by our business and performance, and the agreement reached today reflects the important steps Refresco has realised since the IPO.

“We are convinced that this is a good transaction for the company and all stakeholders involved and we therefore recommend our shareholders to accept the offer. Our focus of growing alongside our customers in the markets where we currently operate and expanding geographically remains unchanged. I look forward to this new phase of private ownership, and for all our employees and customers to capitalize on the opportunities ahead of us.”

The consortium has already financed the deal and completed its due diligence, which it said provided high chance of the transaction completing quickly.

Major shareholders and shareholding members of the boards, holding in aggregate 26.5% of the total issued and outstanding shares, have committed to tender all their shares

Jim Pittman, senior vice president of private equity at bcIMC, said: “bcIMC has followed Refresco with interest for several years. We feel its scale, global presence, and track record of growth are a good fit for our clients’ portfolios. We are keen to work with PAI, a long-term strategic partner, to support Refresco and management in the execution of its strategic plans over the coming years.”

Refresco has been on a buy-and-build campaign since floating its shares on the Amsterdam Stock Exchange in March 2015. In July 2016, it refinanced its €672m loan facility to fund more acquisitions after buying Dutch beverage manufacturer DIS for €72m and a PepsiCo bottling plant in Hamburg earlier in the year.

The soft drinks firm, which bottles for Tesco in the UK, also acquired large scale US bottler Whitlock Packaging for $129m (£98.3m), entering the North American market for the first time, in late July 2016.

Morning update

Dutch brewer Heineken has issued a third quarter trading update this morning, reporting a 2.5% organic rise in beer sales with growth in Asia Pacific, Americas and Africa, Middle East and Eastern Europe offsetting weaker performance in Europe.

Volumes of Heineken itself were up 3.4%, driven by growth in Brazil, South Africa, Russia and Mexico.

Organic consolidated beer volume declined by 2.8% in Europe, with negative performance in key markets such as France and the Netherlands – negatively impacted by tough comparatives and a cool summer.

Volumes in the UK were down double digit, continuing to be impacted by a partial de-listing at “a large customer” understood to be Tesco.

However, organic volumes were up 8.8% in Africa, Middle East & Eastern Europe and by 2.9% in the Americas, despite a mid-single digit decline in the US. In Asia Pacific Asia Pacific organic consolidated beer volume was up 12.2%.

Reported net profit for the first nine months of the financial year was up to €1.49bn from €1.24bn in the nine months of 2016 – though the latter including an asset impairment of €233m in the Democratic Republic of Congo (DRC).

Jean-François van Boxmeer, chairman and CEO, commented: “Performance in the third quarter was solid, with an acceleration of organic volume growth in Asia Pacific and Africa, Middle East & Eastern Europe. Growth in Asia Pacific continued to be driven by Vietnam and Cambodia whilst in Africa, Middle East & Eastern Europe, the main contributors were Russia, Ethiopia and South Africa. In the Americas, Mexico continued to deliver, and weaker volumes in the US were offset by growth coming from Brazil.

Europe had to face tough comparatives, partly due to less favourable weather in some key markets. During the period we completed the acquisition of Punch Securitisation A. Our full year expectations remain unchanged.”

Also this morning, British American Tobacco (BATS) is hosting a capital markets day, in which it will outline its strategy and objectives for growth.

It plans to generate NGP (next generation products) revenue of over £500m this year, and for this to double in 2018 to over £1bn, rising to more than £5bn in 2022. We expect the NGP business to be breaking-even by the end of 2018 and to deliver substantial profit by 2022.

Glo, its Tobacco Heating Product, has continued its excellent growth in Japan and is already achieving a national share in a leading convenience chain of more than 1.8% in only the second week of the national rollout, with share in Sendai now at 10.4%. In South Korea, share in handlers in Seoul has reached 3.5%, after nine weeks.

It will also update its estimate of the impact of foreign currency movements on its full-year numbers, including Reynolds. Assuming FX rates were to remain unchanged for the balance of the year, it expects the translational currency tailwind to be 6.5% on operating profit and 5.5% on EPS. The transactional headwind remains around 2% on operating profit.

Commenting on the Capital Markets Day, CEO Nicandro Durante said: “We are very pleased to be sharing more details on the opportunities for BAT in NGPs and combustibles, and to introduce our new US subsidiary just three months after the completion of the Reynolds acquisition. We are proud to share our exciting future product pipeline across both the Tobacco Heating and Vapour categories and to provide shareholders with an opportunity to experience the products first-hand. Our NGP business has real momentum and our confidence is reflected in the financial objectives we have set out.”

On the markets this morning, the FTSE 100 has started the day flat again at 7,527.1pts.

Heineken is down 1.4% in Amsterdam to €83.78, while Refresco has inevitably jumped 2.5% closer to the €20 per share offer at €19.77.

In the UK British American Tobacco is up 2.4% to 4,938.5p, while other risers include Real Good Food (RGD), up 4.6% to 23p, C&C Group (CCR), up 1.3% to €3.03 and Nichols (NICL), up 1% to 1,716.2p.

Fallers include Hotel Chocolat (HOTC), down 1.6% to 319.5p, Finsbury Food Group (FIF), down 1.4% to 106.5p and McBride (MCB), down 1.3% to 215p.

Yesterday in the City

The FTSE 100 remained largely unchanged for the third consecutive day, edging up a couple of points to 7,526.5pts.

Costa Coffee owner Whitbread (WTB) and McBride (MCB), both of which had market updates yesterday, were heavy fallers.

Whitbread fell 4.8% to 3,753p amid a first half profits slump and McBride slumped 5.6% to 217.8p after revealing a 6.7% drop in first quarter sales.

Elsewhere movement was more muted.

Glanbia (GLB) fell 3% to €15.98, Greencore (GNC) dropped another 1.3% to 191.9p, Greggs fell 1.1% to 1,268p, Just Eat (JE), was down 0.9% to 710.5p and British American Tobacco (BATS) fell 0.9% to 4,825p.

C&C Group (CCR) was up 1.7% ahead of a trading update tomorrow to €2.99, Hotel Chocolat Group (HOTC) was up 1.5% to 324.8p, Worldpay Group (WPG), was up 1.4% to 411.5p, Premier Foods (PFD) rose 1.3% to 40p and Hilton Food Group climbed 1.1% to 840p.