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Doubts grow over AG Barr and Britvic merger

Doubts grow over AG Barr and Britvic merger

Fresh doubts have been raised over the proposed £1.4 billion merger between AG Barr and Britvic, despite the deal being given the go-ahead by the Competition Commission.

The industry watchdog gave its approval to the proposal, after declaring that if the two companies were to form one entity, it would not pose a significant risk to other competitors.

But Britvic's chairman Gerald Corbett said that the company was now in a "different place" to when the deal was initially agreed in September, with reports suggesting that unless a serious level of renegotiation takes place, the merger could be abandoned.

One of the conditions is believed to be that Britvic's current chief executive is handed a similar role at the potential new company, instead of the AG Barr boss Roger White.

The progress of the deal has coincided with a number of cost-cutting measures for Britvic, causing the closure of two manufacturing sites in Chelmsford and Huddersfield, along with a merger of its British and Irish operations.

The company claims that the effects of those measures means that the proposal is no longer as beneficial to the firm.

Mr Corbett said: "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 internationally as well as in the UK.

"These are among the issues the board will reflect on in August once the Competition Commission’s conclusions are known in order to ensure that it acts in the best interests of Britvic’s shareholders."

The doubt over the deal comes despite the two companies releasing a joint statement in February, which seemed to confirm that both sides were still committed.

Nicola Mallard, an analyst at Investec, told The Scotsman that it was likely the two firms would meet again, but stressed that an agreement between the two parties looked less likely than before.

Meanwhile, AG Barr recently posted a 2.4 per cent rise in revenue for the 15 weeks ending May 12th.

 

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