Carlsberg Bondholders Reap Rewards As Takeover Plans Abandoned

By Steve Wynne-Jones
Carlsberg Bondholders Reap Rewards As Takeover Plans Abandoned

Carlsberg, probably best known for its understated beer ads, is now pursuing a similar growth strategy. And bondholders like it.

The company’s chairman, Flemming Besenbacher, says Carlsberg is no longer seeking growth through acquisitions. It doesn’t want to be big, just strong, he told Danish newspaper Berlingske on Monday. The comments, which were confirmed by Carlsberg, put to rest speculation the Danish brewer might be interested in buying SABMiller’s Peroni and Grolsch brands.

“As a bondholder, this is positive news from Carlsberg,” Michael Denbaek, portfolio manager at SEB Investment Management in Copenhagen, said by phone.

The yield on Carlsberg’s 2.5 per cent 1 billion-euro ($1.09 billion) 2024 bond fell five basis points to 2.05 per cent on Monday. Back in September, the yield had traded as high as 2.64 per cent. The spread relative to the government yield curve also narrowed. Bond yields move inversely to prices.

“Carlsberg is one of our core names and we’re long-term investors,” Denbaek said. The fund has increased its position in the company’s bonds from about €15 million a year ago, though Denbaek wouldn’t say exactly how much the SEB unit holds now.


“We’re not too concerned about daily or monthly fluctuations, but obviously have an interest in Carlsberg keeping its investment grade rating, which may be easier if there are no large takeovers,” he said.

Carlsberg no longer has an ambition to be the fastest-growing brewer in the world and has no acquisition plans, Besenbacher said. The comments build on similar signals from Chief Executive Officer Cees ’t Hart. Since joining in June, he has revamped the brewer’s strategy and cut jobs.

“It’s generally positive for bond investors when companies avoid acquisitions that would require further financing and loans,” Denbaek said.

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