PAI, BC Investment to Buy Bottler Refresco for $1.9 Billion

Updated on
  • Sweetened bid after rejection is win for activist shareholder
  • Buyers commit to backing company’s ‘buy and build’ strategy

PAI Partners and British Columbia Investment Management Corp. agreed to buy Dutch soft-drink bottler Refresco Group NV for 1.6 billion euros ($1.9 billion) after an activist shareholder pressured the company to reconsider a sale.

The buyers will pay 20 euros a share in cash, Refresco and British Columbia Investment said in a statement Wednesday. That’s higher than the 19.75 euro-a-share proposal with which PAI convinced the Dutch company to open talks this month. Refresco in April rejected a 1.4 billion-euro bid from the Paris-based private equity firm, only for activist Wyser-Pratte Management Co. to urge it to restart talks.

The bid is another win in the recent wave of shareholder activism in Europe as companies from Nestle SA to Credit Suisse Group AG confront demands for strategy shifts. Wyser-Pratte also opposed the Dutch company’s takeover of Cott Corp.’s soda business, saying it was putting up obstacles to prevent being acquired.

“We are convinced that this is a good transaction for the company and all stakeholders involved,” Refresco Chief Executive Officer Hans Roelofs said in the statement. “Our focus of growing alongside our customers in the markets where we currently operate and expanding geographically remains unchanged.”

Refresco shares rose 2.4 percent to 19.77 euros at 11:45 a.m. in Amsterdam. Before Wednesday, the stock had risen 33 percent since the company’s initial public offering in 2015.

Acquisition Strategy

The offer is 22 percent above Refresco’s average closing share price since the July announcement of the Cott deal, and 41 percent higher than where the stock traded before PAI’s initial offer in April, the buyers said.

PAI, British Columbia Investment and Refresco said they remain committed to the company’s “buy-and-build” strategy of growing through acquisitions. Once the bottler’s shares are no longer listed on the stock market, the company will be able to take on “a little bit more debt” to do deals, Roelofs said on a conference call.

“All the cash that we generate will be available to reinvest in opportunities, which might be acquisitions, special investments, might be whatever,” he said. “The financial buffer to make new steps is immediately present, while in the public domain, that’s not the case.”

In July, Refresco agreed to buy the soda business of Canada’s Cott Corp. for $1.25 billion. The purchase will create the largest independent bottler for retailers and consumer companies in Europe and North America, Refresco said at the time.

Following the purchase of the Cott business, PAI decided to bring in BC Investment Management, which is an investor in some of its funds, on a new bid for Refresco, a person familiar with the matter said. The size of the equity investment had increased and the buyout firm was looking for a way to lower the risk of the investment, the person said, asking not to be named as the information is private.

JPMorgan and Allen & Overy LLP advised Refresco on the deal, while Rabobank worked with the company’s supervisory board. Rothschild, Credit Suisse, Loyens & Loeff NV and Freshfields Bruckhaus Deringer LLP advised the buyers. BC Investment Management, based in Victoria, British Columbia, invests pension funds for public employees in the Canadian province.

Refresco, based in Rotterdam, was founded in 1999 through a management buyout of a Dutch dairy company and expanded by buying local bottlers in Europe. It entered North America by buying Whitlock Packaging last year. The company says the Cott deal, expected to close before the end of this year, will make it the world’s largest independent soft-drink bottler.

— With assistance by Ellen Proper

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