BritVic completes £56.8m acquisition of Brazil drinks company

BritVic, the owner of Robinson's juices and a bottler for PepsiCo brands, has completed the £56.8m acquisition of Brazilian drink firm Bela Ischia Alimentos.

Following the completion of the due diligence process, the FTSE 250 drinks company bought Bela Ischia for 218m Brazilian reals in order to strengthen BritVic's brand portfolio and distribution footprint in the country as the acquisitions complements its existing assets in Sao Paulo and the north east.

BritVic expects the acquisition to generate at least 10m Brazilian reals of cost from joint efficiencies in procurement, production, logistics and administration.

However, about £3.5m of exceptional costs will be incurred this year due to the acquisition and integration of Bela Ischia.

Bela Ischia generated revenue of 160m Brazilian reals and earnings before interest, tax depreciation and amortisation (EBITDA) of 18.5m Brazilian reals in 2016.

Phil Carroll, analyst at Shore Capital, said: "As we have stated previously, whilst not having any prior knowledge of Bela Ischia as a business but taking into account its strong brand position in certain important geographies, we see this as a sensible deal at a reasonable valuation based on revenue (1.4 times historic revenue).

"Assuming a cash/debt neutral position for the business, the enterprise value and earnings before interest, tax, depreciation and amortisation (EBITDA) ratio of 11.8 times is more punchy but we note the opportunity for significant synergies both in costs and revenues and the underlying double digit growth in the business."

Carroll calculated the deal would add roughly £40m of revenue to the group, taking the contribution from Brazil from near 8% to 10% of group revenue, "so not a game changer in any way but we do see this as management once again being pro-active in looking for opportunities to create shareholder value".