Permira gambles on soft drinks stake(2)

The European mega fund has bought a stake in Britvic, a UK soft drinks company, to convince its board to come to the table. The tactic might help end a run of high-profile public-to-private reversals.

Permira, manager of Europe’s largest buyout fund, has built a 13.98 percent stake in Britvic, a UK-listed soft drinks group, in the hope of flushing out a recommendation from the board or a third-party approach.

A spokesman for the firm declined to comment on the increase in its stake in the drinks business, which supplies Pepsi, 7UP and Tango carbonated drinks. 

He said Permira’s position had not changed from October when press speculation about an approach for Britvic prompted Permira to issue a statement. Then it said it would not make an offer within six months unless it had the agreement or recommendation of the board of Britvic or if a third party made an approach or an offer for Britvic, or in the event of a reverse takeover.

Both groups denied talks at that time. Permira had suffered a run of take-private reversals, watching assets such as McCarthy & Stone, a retirement home business, and De Vere, a hotel chain, slip from its grasp. 

Permira bought its stake on Monday night acquiring 24 million share taking its total to just more than 30 million and helping to lift the share price to an all-time high today of 292p at 11.15 GMT. Alongside French insurance giant Axa, it is the joint largest shareholder in Britvic, which floated a year ago at 230p.

The drinks group’s management led by chairman Gerald Corbett is not interested in selling, despite a string of profit warnings since its stock market debut.

Pepsi, the US soft drinks company which owns 5 percent of Britvic, could block any potential deal by cancelling contracts with Britvic to package, distribute and sell its drinks. It reserves the right to terminate its contracts if a third party gains a 40 percent stake or if a direct competitor gets 10 percent.