European bottler Refresco rejects 1.4bn euro takeover bid

European drinks producer Refresco has turned down a €1.4 billion takeover offer from private equity group PAI Partners.

The bottler confirmed that it received ‘an unsolicited, indicative and conditional proposal’ to merge earlier this week. The offer was to acquire all 81.2 million shares in the company at an aggregate cash consideration of €1.404 billion.

But, confirming they’d rejected the offer, the group said that the proposed terms ‘did not merit any further investigation’.

It makes the potential for a future bid less likely, less than two months after Kraft Heinz’s high-profile approach for Unilever was comprehensively rejected.

Analysis: Who are bidders PAI Partners?

Based in Paris, the private equity group claims to have assets under its management worth €7.1 billion and portfolio sales of €14 billion from around 20 European companies with global reach. It’s a former investor in Yoplait, United Biscuits and Chr. Hansen, while its current investments in the food and beverage industry include the ice cream manufacturer R&R. PAI Partners acquired the ice cream company in 2013 for €929 million with a view to turning R&R into one of the world’s leading ice cream companies.

As a result, the group has an interest in Froneri, the third largest ice cream player in the world and the result of a joint venture between R&R and Nestlé. 

Until last year, it also held almost all the shares in Swissport, the largest ground and cargo handling company at airports around the world, before selling its stake to a Chinese group for $2.8 billion.

Refresco is one of Europe’s leading independent bottlers of soft drinks, offering private-label and co-packing services across a number of still and carbonated beverage categories.

The potential for further growth is clear to see: Refresco posted full-year revenue for 2016 of €2.1 billion – a 4.5% increase on 2015 – with total volume increasing 6% to 6.46 billion litres.

It follows a 1% decrease in revenue the previous year, along with lower volume growth.

The rise would have been driven in part by its acquisition of US-based Whitlock Packaging in July 2016 – its first foray into the US market – as well as the deal for Dutch beverage co-packing business DIS three months earlier. The two transactions

As well as becoming more profitable, the company is improving its sustainability performance too. Two weeks ago, Refresco was one of four companies – along with Döhler, FrieslandCampina Riedel and Verbruggen Juice Trading – to sign up to a global covenant targeting 100% sustainable sourcing for their juices within the next decade.