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Competition Commission Clears Proposed AG Barr and Britvic Merger

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Competition Commission Clears Proposed AG Barr and Britvic Merger

Competition Commission Clears Proposed AG Barr and Britvic Merger
July 09
14:14 2013

The UK Competition Commission has formally cleared the proposed acquisition by AG Barr of Britvic. The CC has concluded that the proposed acquisition is not expected to result in a substantial lessening of competition and would not cause wholesale prices to increase significantly.

AG Barr and Britvic are both active in the manufacture and supply of a range of carbonated and non-carbonated soft drink brands. Irn-Bru is the largest Barr brand and has a particularly strong presence in Scotland. Other Barr brands include Orangina, KA and Rubicon. Britvic’s brands include Robinsons, J2O, Fruit Shoot, Tango and Pepsi.

However, since the merger deal to create one of the leading soft drinks companies in Europe with annual sales of over £1.5 billion was originally agreed last November, circumstances have changed. Under the original terms of the proposed merger Britvic shareholders would have owned 63% of the combined business with AG Barr shareholders the remaining 37%. This reflected the relative market capitalisation of the two companies prior to the merger agreement. 

Britvic’s Chairman, Gerald Corbett, comments: “The merger lapsed in February when the deal was referred to the Competition Commission. We would obviously consider any proposal tabled in the interests of shareholders. However, 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.”

The AG Barr board has welcomed the Competition Commission’s final decision to clear the merger as a significant positive step. It will now actively reconsider a potential merger with Britvic.

The AG Barr board says it 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 in the short, medium and long term.

AG Barr has until 5.00 pm on Tuesday, 30 July 2013, to either announce a firm intention to make an offer for Britvic or announce that it does not intend to make an offer.


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