British soft drink makers Britvic and AG Barr terminate merger
12 July 2013
A planned merger between British soft drink makers Britvic Plc and AG Barr Plc collapsed after Britvic rejected a new proposal and both agreed to terminate the deal.
Robinsons Barley Water maker Britvic and AG Barr, maker of Irn-Bru, had in November 2012 agreed to merge in an all-share deal, but the merger lapsed three months later after the UK Office of Fair Trading referred the deal to the Competition Commission.
The Competition Commission this week cleared the merger saying that the two companies' brands were not close competitors.
But Britvic was no longer keen to merge since the six-month delay allowed it to cut costs and expand its business abroad to countries like India, Spain and the US.
Britvic chairman, Gerald Corbett, said in a statement that the company ''is in a different place to last summer when the terms of the merger were agreed... the cost savings from merging are less, we are performing better, we have new management and we have a new strategy to deliver good growth.''
Britvic said that its board had a number of discussions with AG Barr regarding the proposed merger after they received approval from the Competition Commission on 9 July. Britvic received a new proposal from AG Barr for a merger with a ratio of 65 per cent Britvic 35 per cent A G Barr, which is only a small improvement on the terms announced in 14 November.
Under the original terms Britvic shareholders would have owned 63 per cent of the combined group, while Barr shareholders would have owned the rest.
Britvic said that it therefore rejected the proposal and has agreed with AG Barr to terminate discussions.
Corbett said, "Under Simon Litherland's leadership, our performance has significantly improved and this, combined with the £30 million cost reduction plan and accelerating international expansion, means that our future is bright. The execution and delivery of this is now the absolute priority of the Britvic team. We wish Barr and its management team well. They are good people with a fine business."
A G Barr chairman, Ronnie Hanna, said, "While we are disappointed that the opportunity to create significant value for both sets of shareholders has been rejected, the Board of A.G. Barr has every reason to be confident of its position as a stand-alone company."
Britvic and A G Barr's merger would have created one of Europe's leading beverage companies with sales of £1.5 billion ($2.3 billion).