Some UK shares look ripe for takeover, and Britvic (LSE: BVIC) has just swung into view.
On 21 June, the company confirmed a bid from Carlsberg at a price of 1,250p per share.
The bid was made on 11 June, and came after a previous offer from the same bidder at 1,200p on 6 June. The share price gained a quick 15% when the news broke.
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A bullish 2024
It follows a smaller rise the previous day, based on the speculation. And it comes not long after interim results in May gave it a boost.
In all, 2024 has been great so far for Britivic investors, with their stock up 39% since the start of the year.
How was this new bid received? The board says it “significantly undervalues Britvic and its current and future prospects“, and kicked it out.
The 1,250p bid was 23% ahead of the previous day’s close. But with the Britvic share price up 15% to 1,168p, at the time of writing, that premium has dropped to 7%.
What next?
We might see a further bid, though we really can’t know if any firm offer will be made. For its part, the Britivic board says it will “consider any further proposal on its merits“.
Clearly, quite a few investors have jumped on board already. Is that in the hope of a new bid and a quick profit? Or have these events made them realise Britvic shares are cheap, based on their long-term merits?
I’d like to think there’s more of the latter, though I suspect otherwise.
What should we do?
Those who think there’s a chance of a third bid from Carlsberg, or something from a new bidder, might need to move fast.
These things, once they’re out in the open, often tend to move quickly. There are rules, for one thing, that mean a bidder has a limited time to put up or shut up once their intentions are known.
For me though, that would be too much of a risk. I’ve no idea what will happen next, so betting on it would be a pure gamble.
Long-term value
Instead, I’d take a good look at the company and weigh up its long-term value. And if I think it’s a good one to consider buying and holding for a decade or more, it might go on my buy list.
But I wouldn’t buy until the takeover mood has faded, as I think the share price is very likely to fall should it become clear that no further bids are on the cards.
I know I’d miss any quick profit should someone stump up enough cash to buy out the stock. But that’s fine.
Valuation
First-half results looked upbeat all round. And forecasts show steady earnings and dividend growth in the next few years.
Beyond that, I haven’t done any more research yet. But that’s where I’d start.
