What’s going on with the Britvic share price?

Jon Smith flags up why Britvic’s share price is surging on Friday, but believes that the company is in a great place to keep going.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Britvic (LSE:BVIC) share price rocketed 11% higher at one point today (21 June). It meant the stock was up 27% over the past year, well above the FTSE 250 index average return. The move today comes on the back of some big news, which makes it a really interesting stock to consider now.

Saying no to another bid

The news out today was the rejection of a takeover bid from Carlsberg. The cash offer was 1,250p per share, which was 21% higher than where the stock closed yesterday. This was a second bid from the company, which had made a lower offer at the start of the month.

Time will tell whether Carlsberg makes another offer. But the news tells me a couple of really key investing points.

One is that other businesses think Britvic is cheap right now at the current valuation. If this wasn’t the case, takeover bids wouldn’t be coming in at a premium to the current price. The second is that there’s clear long-term demand for Britvic’s products. The soft drinks firm owns 39 different brands, trading all around the world. If there wasn’t a clear vision ahead, again, there wouldn’t be as much interest in buying it.

What the rejection tells me

At the moment, several FTSE 250 and FTSE 100 companies are in the process of being bought. In fact, earlier this week I wrote about Hargreaves Lansdown. The FTSE 100 firm is likely to be acquired by a private equity group.

I didn’t see the value in investing there, simply because the deal looks pretty well done. There’s limited movement for the share price from here. However, this isn’t the case for Britvic.

The rally in the share price today, despite the offer being rejected, shows me that investors feel the company can thrive by itself. Yet it also shows me that the stock is potentially undervalued and that the stock is playing catch-up to get to a fair price.

True, a third and better offer might be coming further down the line. But I don’t see this as a massive risk. If I buy the stock now and no offer comes, I like the fundamentals of the business anyway. If an offer gets accepted, it’ll be at a premium to what I pay for it now, so I won’t lose money.

To be clear, I’m not buying the stock simply hoping for some quick profits from a deal. Rather, the rejected offer flags up to me that this is a business that a lot of people are interested in right now.

Bringing it all together

Britvic does come with risks. The 2023 results showed revenue up 6.6% versus 2022, but pre-tax profit fell to £156.8m from £175.1m the year before. This was blamed partly on the poor weather, which shows how the business can be negatively impacted by external factors.

On balance, I’m really interested in buying Britvic shares and am thinking about doing so imminently.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Britvic Plc and Hargreaves Lansdown Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Market Movers

Happy young female stock-picker in a cafe
Investing Articles

Is a takeover offer about to boost the Rentokil stock price, and should I buy?

The Rentokil share price is up 10% on takeover rumours. Is it a stock to buy or one to be…

Read more »

Investing Articles

What do Hargreaves Lansdown results mean for the share price?

The Hargreaves Lansdown share price has surged in recent months on takeover expectations, but what will the recent results mean…

Read more »

Windmills for electric power production.
Investing Articles

Renewables output up 60%, but will the SSE share price go the way of National Grid’s?

The SSE share price makes the company look attractive, but is there a big risk to consider down the road…

Read more »

Investing Articles

The Diploma share price dips despite strong revenue growth. Time to buy?

Diploma is a quality company, but it usually comes with a share price to match. So is the decline after…

Read more »

Investing Articles

2 FTSE 250 shares I want to own before the next UK stock market boom

Paul Summers picks out two very different FTSE 250 stocks that, based on recent news flow, could do very well…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

The 3i Group share price rises after a positive Q1 performance update!

The 3i Group share price is up 1.3% following the announcement of its first-quarter results. This Fool takes a look…

Read more »

Investing Articles

Here’s why the AJ Bell share price is soaring!

The AJ Bell share price took off on 18 July after the company's impressive trading update. Our writer takes a…

Read more »

A front-view shot of a multi-ethnic family with two children walking down a city street on a cold December night.
Investing Articles

As the Frasers Group share price jumps 8% on FY earnings, I’m thinking of buying

The Frasers Group share price has trebled over the past five years, while other retailers have struggled. But the valuation…

Read more »