Doubts grow over Britvic and AG Barr merger despite final approval

Britvic cast further doubt today on whether its Robinsons squash business will mix with AG Barr’s Irn-Bru and Orangina, despite the two titans of soft drinks finally securing official clearance to merge from the Competition Commission.

The firms agreed a £1.4 billion all-share merger in November, which lapsed in February when the Takeover Panel launched an investigation into the deal. But the watchdog provisionally cleared the merger in June, and gave official approval today.

Meanwhile Britvic, whose other brands include Pepsi in the UK, J20 and Fruit Shoot, has expanded overseas and begun its own cost-saving plan, leading chairman Gerald Corbett to pour cold water on a deal with AG Barr.

In a similar statement to one he made in June, Corbett said today: “Britvic is in a very different position to last summer when the merger was agreed. We have a new chief executive in Simon Litherland, who has done a fantastic job in implementing his new plan for Britvic. The board is confident of driving £30 million of cost savings over the next three years and of the enhanced international expansion opportunities. In addition, performance has improved, the merger benefits are materially less than they were, and our share price is almost twice the level it was.

“Britvic’s prospects as a stand-alone company are bright.”

AG Barr appears to be left at the altar, still wanting the marriage to take place. “The board... believes this [CC approval] is a significant positive step and will actively reconsider a potential merger with Britvic,” the Irn-Bru and Rubicon juice maker said. “The board will review all material new developments since the original merger terms were agreed but currently believes that, other than Britvic’s recently announced short-term cost saving plan, little has changed to alter its previous conviction that a merger represents a unique opportunity for value creation for both sets of shareholders.”

The Takeover Panel’s ruling gives AG Barr until 5pm on July 30 to make a firm offer for Britvic or walk away.

AG Barr’s shares fell 6p to 525.5p. Britvic, whose Robinson’s squash was supped by Andy Murray and his rivals at Wimbledon, rose 4.1p to 524.6p.