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AG Barr looking at Lucozade and Ribena deals

AG Barr looking at Lucozade and Ribena deals

AG Barr, the Scottish manufacturer behind Irn Bru, is reportedly lining up a possible £1 billion bid for two of the UK's most popular soft drinks; Lucozade and Ribena, which are both due to be sold by giant Glaxosmithkline.

Both of the brands are expected to be monitored closely by AG Barr, which recently saw its merger with rival company Britvic collapse, after the latter claimed that its future could be secured without the deal.

Both companies have declined to comment on the speculation, although Glaxosmithkline has confirmed that it is looking to auction off both Lucozade and Ribena, as it believes that both brands would be worth more to a larger drinks business.

Both brands are mainly sold in western markets, reaching sales of around £600 million a year, and are made in the UK at a factory in Coleford in Gloucestershire, as well as in Nigeria and Kenya.

The two drinks were owned by Beecham before a merger deal with Glaxosmithkline and are a part of its consumer healthcare division, which also includes Horlicks and Panadol, and reached annual sales of £5.1 billion for 2012.

AG Barr has so far declined to comment on the speculation, suggesting it is interested in making a bid, which was first reported by the Sunday Times.

It claimed the firm was weighing up a partnership with equity firms Blackstone and Lion Capital, with a view of making an offer for both brands.

Interest is expected to be high from a number of companies, with reports suggesting that the Japanese drinks manufacturer Suntory is the favourite to land a deal, and add to its already bulging portfolio, which includes Orangina and Schweppes.

Although many city analysts have agreed that a bid would be in the interests of AG Barr, some have stated that the company should not leave itself open to accusations of acting too quickly amid the failed merger with Britvic.

David Cumming, head of UK equities at Standard Life Investments, told the BBC: "They (AG Barr) have to be careful they don’t send a signal that the growth options from the existing drinks franchises – things like Irn Bru and Rubicon – is running out of steam."

 

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