Britvic rallies as Numis reiterates 'buy' after acquisition news

3rd Jan 2017 09:04

(ShareCast News) - Britvic's shares rose on Tuesday as Numis reiterated a 'buy' rating and target price of 697p after the soft drinks producer announced a deal to buy Bela Ischia Alimentos Ltda.Britvic said on Tuesday an agreement in principle has been made to acquire the Brazilian juice and concentrates business for 218m Brazilian Real. The deal is expected to close at the end of March.The acquisition strengthens Britivic's position in Brazil where the company bought squash manufacturer Ebba in September 2015, according to Numis."This looks a sound and synergistic add-on to Ebba," the broker said."The scale of the deal is not such that it will make much odds in the Britvic context but the purchase metrics are decent and the competitive position of Ebba will be strengthened."Numis said the acquisition seems a "decent move" and noted that major cost synergies are forecast with the deal expected to be earnings accretive in the first year. Bela Ischia is a "strong brand" in the Rio de Janeiro and Minas Gerais areas while Ebba is performs well in Sao Paulo and north-east regions, the broker added.A 3% market share of the juice market, including liquid concentrates, ready-to-drink and powder, has been added to the existing 15% of Ebba."We have not adjusted our forecasts and target price for this deal as yet - better to await completion and some feel as to the synergies scale. However, there looks nothing to carp about regarding the proposed purchase."Shares increased 1.41% to 575p at 0921 GMT.