Fevertree shares spike on ‘transformational’ deal with Molson Coors
Fevertree shares have soared more than 20 per cent after the drinks company announced a tie-up with Coors and Carling owner Molson Coors.
The agreement will see Molson Coors handle the exclusive sales, distribution and production of the Fevertree brand in the US.
Analysts were uniformly positive about the deal, and expected both businesses to benefit from diversifying into different markets.
Molson Coors will also acquire an 8.5 per cent shareholding in Fevertree, with the proceeds of the issue returned to shareholders via a share buyback programme of £71m.
Chief executive of Fever-Tree Tim Warrillow called the deal “transformational” for the Fever-Tree brand in the US.
“As the Fever-Tree brand has grown in the US, so has the opportunity ahead of us, reflecting the increasing number of categories and occasions that our products are relevant to,” he added.
Chief commercial officer of Molson Coors Michelle St. Jacques similarly called the Fevertree the “perfect fit” for the company’s portfolio of non alcoholic beverages.
“Fevertree… will benefit from a significant uplift in scale and execution capability in its largest market, whilst also de-risking the supply chain and driving higher quality of earnings,” Jeffries analysts said.
“The deal is a game changer for Fevertree’s potential earnings power,” they added.
Panmure Liberum similarly touted the deal as “transformational” with Molson Coors “a long-term backer and a potential eventual acquirer”.
“Guaranteed profits for five years and no working capital investment requirement in the US should free up significant cash flow for the group to return to shareholders,” Panmure added.