Carlsberg-Britvic: thoughts on an unpopular proposal On Friday, Britvic announced that it had rejected a 2nd unsolicited cash offer of GBp1,250/share (a c.29% premium to its undisturbed share price) from Carlsberg. Carlsberg''s shares closed down -9% in response. In this report we outline our thoughts on what has thus far been an unpopular proposal. Will Carlsberg return with a higher offer? The proposal to acquire Britvic likely has the backing of the Carlsberg Foundation, we believe there is a good chance that Carlsberg returns with a third (and likely final) offer of around GBp1,350/share. Acquisition of Britvic would materially shift Carlsberg towards Non-Beer Within we outline the likely impact Britvic would have on Carlsberg''s sales / margin profile. In the event of a combination, non-beer volumes would become 1/3rd of the pro-forma group (cf. 19% in CY23) and the UK the largest market by sales (c.22% of pro-forma sales cf. 11% in CY23e). Deal maths: good EPS accretion, solid returns but much higher leverage At a take-out price of GBp1,350 we derive pre-synergy valuation of 15.6x EV/EBIT CY25e for Britvic (cf. 13.5x for Carlsberg). Assuming Carlsberg would be able to achieve cost synergies of c.5% of Britvic sales (there is good reason to think this is possible), we derive CY27e EPS accretion of +11%, ROIC of 7.5% and pro-forma ND/EBITDA of 3.5x (BNNPE def.) in CY24e. We are not great fans of the deal, but the bad news is more than priced into the shares Like most investors (we summarise feedback within), we are not great fans of the proposed deal for we struggle with the idea that acquiring a lower growth asset, at a higher (pre-synergy) valuation than Carlsberg is the best use of capital. However, we are mindful that: 1) the deal may not happen; 2) even if it does, we believe the bad news is more than priced in. We maintain our Outperform rating; but cut TP to DKK1,025 (from DKK1,090) to reflect the risk of higher third offer than we expect.