Carlsberg (CARLB; Baa1, NR, BBB+ CW Neg) Increases stake in JV

Co seems to have a propensity for acquisitions recently; £3.3b into Britvic and on the same day did £206m to buyback a JV stake with Marson. Now it's buying back the remaining 33% shareholding in Carlberg South Asia for £422m immediate cash use (another £163m looks later down the road). The business in question operates in India and Nepal.

• Transaction expected to close at the end of 4Q24 (Oct-Dec '24). Reminder it expects Britvic to close in 1Q25 (Jan-Mar '25) and Marson stake in 3Q24.
• Reminder cash-shortfall on Britvic acquisition is £1.8b which we expect supply on when it refi's the bridge facilities. We are waiting for regulatory approvals, Britvic equities {BVIC LN Equity} are confident pricing ~88%+ prob. of closing at £13.15/share.
• We don't have a firm view on what Britvic does to fundamentals; it's increasing its soft-drink exposure (from 16% to 27%) but not adding much new geographical diversification and on stand-alone Britvic is slightly margin dilutive.
• The expected supply has kept CARLB at wide end of brewer space, no firm view from us on the levels.