Britvic may renegotiate or quit AG Barr merger deal

 Breaking News
  • Nestlé Inaugurates New Nescafé Dolce Gusto Production in Vietnam Nestlé has inaugurated a new Nescafé Dolce Gusto capsule production line in Dong Nai Province, Vietnam. The site will process an expected 2,500 tons of coffee per year (equivalent to 130 million capsules), using high quality coffee beans from Vietnam. This volume is expected to increase in the coming years. The investment reflects Nestlé’s clear focus on high-growth, [...]...
  • Pink Lemonade Yogurt? Arla Brings Indulgence to New Markets Arla Foods is to expand its successful Finnish brand, Ihana, into new markets with the premium yogurt range being launched in Denmark and the UK. Meaning ‘wonderful’ in Finnish, Ihana was launched through an extensive brand launch in 2016 in Finland with an iconic new design. Indulgence is one of the few areas in growth within [...]...
  • Process Components Announces Kemutec Expansion into Netherlands Process Components has announced the expansion of subsidiary company Kemutec in Europe, with the long-established manufacturing brand opening a new office in the Netherlands. The move forms a key part of its global strategy to extend its global territories, significantly grow its revenues and create new jobs. Kemutec has more than three decades’ worth of heritage in [...]...
  • Packaging Automation Supports the Reduction in Plastic Packaging Waste With the launch of the UK Plastics Pact to address the impact plastic waste is having on the environment, retailers and manufacturers are more conscious of single use and non-recyclable plastics and want to cater for the green consumer. The industry is turning to various kinds of eco-friendly packaging with the aim of reducing plastic [...]...
  • Glanbia Cheese Joint Venture to Build New €130 Million Mozzarella Cheese Facility Glanbia Cheese, the joint venture business between Glanbia plc and Leprino Foods, plans to build a new, world-class mozzarella cheese manufacturing facility in Portlaoise, County Laois, Ireland. A site for the new facility has been identified at the recently established Togher National Industrial Estate in Portlaoise. A total of €130 million will be invested in [...]...

Britvic may renegotiate or quit AG Barr merger deal

July 11
09:12 2013

Soft drinks firm Britvic has signalled its willingness to renegotiate the terms of its merger with business rival AG Barr or abandon the deal, after the Competition Commission issued a final approval yesterday (July 9).

Commenting after the commission ruled that a potential merger would not result in a substantial lessening of competition, Britvic’s chairman, Gerald Corbett, hinted at a change of heart in a statement titled ‘Competition Commission clears possible merger’.

“Britvic is in a very different position to last summer when the merger was agreed,” said Corbett.

Since then, Britvic had appointed Simon Litherland, who had “done a fantastic job” in implementing his new plan for Britvic, he added.

Also, the board was confident of driving £30M of cost savings over the next three years and reaping the rewards of “the enhanced international expansion opportunities”.

‘Expansion opportunities’

Corbett added that Britvic’s performance had improved, noting that “the merger benefits are materially less than they were and our share price is almost twice the level it was”.

Consequently, “Britvic’s prospects as a stand-alone company are bright,” he said.

But Corbett pledged to consider any proposal tabled in the interests of shareholders.

AG Barr dismissed as speculation any suggestion that Britvic might wish to renegotiate or abandon merger talks.

A spokesman told FoodManufacture.co.uk: “We have set out very clearly that we will actively reconsider [the merger with Britvic] in the light of what has gone on.”

Its statement, more positively titled ‘Competition Commission Final Clearance’, AG Barr described the ruling as “a significant positive step” and confirmed its intention to reconsider a potential merger with Britvic.

But, unlike its prospective merger partner, it believed “little has changed” since the original merger terms were agreed.

‘Little has changed’

“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 in the short-, medium- and long-term,” according to the AG Barr statement.

Meanwhile, last month City analysts widely predicted that Britvic would seek improved merger terms, after the commission issued provisional approval on June 11.

Speaking last month, Panmure Gordon analyst Damian McNeela noted: “Arguably, Britvic is not the wounded animal it was last year.”

While McNeela believed the merger continued to make sense, he forecast Britvic would seek improved terms given the progress the business had made over recent months.

Investec analyst Nicola Mallard agreed that a merger was not a foregone conclusion.

“Britvic highlights it is in a ’different place’ to last summer, which, in our view, probably reduces the likelihood of a deal this time round,” said Mallard.

Under the terms of the original merger deal, AG Barr shareholders would receive 37% of the shares in the enlarged company with Britvic shareholders receiving 63%.

Britvic makes PepsiCo brands in the UK under licence, along with Tango, 7UP, and Lipton Ice Tea.

AG Barr makes Bru, Tizer and Strathmore Water.

About Author



Related Articles

Food & Drink Business Conference & Exhibition 2016

Upcoming Events

  • September 5, 2018Int'l Food Products and Processing Technologies Exhibition (WorldFood Istanbul)
  • September 15, 2018iba
  • September 25, 2018PPMA Show 2018
  • September 27, 2018Int'l Fruit Show (eurofruit)
AEC v1.0.4

find food jobs

The Magazine

F&D Business Preferred Suppliers

New Subscriber

Subscribe Here