Carlsberg Takeover of Britvic: 3 Tips When Acquiring a Business

July 23, 2024

Carlsberg Takeover of Britvic: 3 Tips When Acquiring a Business

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By Emily Shingler

It was recently announced that Carlsberg has agreed a £3.3bn deal to buy Robinsons squash maker, Britvic. Carlsberg hopes that this acquisition will present an opportunity for them to expand their global partnership with PepsiCo, as Britvic holds an exclusive licence with the US firm.

At the beginning of July, Carlsberg announced its plans to create a single beverage company named Carlsberg Britvic, with the intention of growing its business in the UK and western Europe. The proposed takeover will be voted upon by Britvic shareholders at a general meeting in the next few months.

Looking to grow your business through acquisition?

Acquiring another business is an effective way for a company to grow its business and diversify its existing offering. In light of the recent announcement, our M&A experts have outlined 3 key considerations if you are a business growing through acquisition.

1. Strategic rationale

Compare and assess each potential acquisition against your company’s own strategic objectives. Having clarity over your strategy will be useful when entering into the transaction.

Consider whether you are looking at a share or an asset acquisition. A share acquisition will involve buying the entire share capital of a target company or obtaining a majority stake in the target. This route allows for ownership of the target business itself. Whereas an asset acquisition will involve purchasing specific assets of the business and providing you with ownership of those assets only. Assets may include a significant contract, land or intellectual property.

It is important that you assess and determine the most suitable structure for you. Consider if you are willing to take on all the liabilities and obligations of a company, or if your aim can be achieved by acquiring a few assets of the target.

2. Undertake comprehensive due diligence

Conducting thorough due diligence on the proposed target business and its assets is important for identifying risks and any major issues. It is also important for you to ultimately determine if it’s a good purchase and in line with your growth strategy.

Due diligence may include:

• Surveying the business’ assets, both its tangible and intangible assets
• Analysing the company’s liabilities including any ongoing legal proceedings, debts and taxes
• Assessing the company’s cash flows and finances
• Determining if any third-party consents are required for the transaction

3. Take professional advice early

Buying a business is a big step for any company and the process can be long and complex. Obtaining professional advice early is key to ensuring a smoother process.

Legal professionals can assist with negotiations at an early stage and assist in drafting heads of terms. This can help set expectation levels on both parties on matters such as the timetable and procedure. Accountants can assist with setting the parameters for a valuation of the target business and advise on how best to structure the purchase price.

Additionally, professional advisors can help you identify any practical issues you may need to consider, such as whether a split exchange and completion is desirable to aid handover logistics.

It is also vital to take tax advice early to determine the tax implications of any proposed share or asset purchase.

Considering buying or selling your business? Our M&A experts at Darwin Gray are here to help. Contact Emily Shingler on 029 2082 9102 or eshingler@darwingray.com for a free initial chat to see how we can help you.