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On Tuesday, Deutsche Bank updated its stance on Britvic Plc. (BVIC:LN) (OTC: BTVCF) shares, increasing the price target to £13.15 from £10.80, while retaining a Hold rating on the stock.
This adjustment follows the announcement of a recommended cash offer for Britvic by Carlsberg (CSE:CARLb), valuing the company at 1,315p per share. This offer reflects a 47% premium over Britvic's three-month volume-weighted average price leading up to June 19, 2024.
The proposed acquisition price is based on a 13.6x enterprise value (EV) multiple to Britvic's adjusted EBITDA of £306 million for the 12 months ending March 31, 2024. The deal also includes a 25p special dividend, which is expected to be well-received by Britvic's long-term shareholders.
Deutsche Bank's analyst highlighted the margin opportunities that Britvic has yet to fully capitalize on, suggesting that there is still potential for growth. Despite this, the firm believes that the third and improved offer from Carlsberg should satisfy Britvic shareholders.
The merger proposition comes at a time when Britvic's financial performance has been under watchful eyes. The premium offered is seen as a significant acknowledgment of the company's value and prospects.
Britvic's stock has been trading at an average of 897p over the three months preceding June 19, 2024. With the new price target set by Deutsche Bank, the company's valuation aligns with the terms of the Carlsberg offer, setting a new benchmark for the stock's performance.
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