Analysis - Britvic, AG Barr merger chances fade after shake-up
Britvic's proposed merger with Barr was halted in February
Nomura's Ian Shackleton said he now gave the deal no more than 10% chance because “Britvic appears to be capturing some of the perceived benefits by itself”. In February, after the Barr deal was referred to the UK's Competition Commission, Shackleton said the merger had a 30% chance of completing.
Britvic announced today it plans to close two factories and one warehouse in the UK as part of a strategy to save GBP30m a year by 2016.
Meanwhile, UBS analysts said the cost savings plan is a “positive” and shows new chief executive Simon Litherland “has hit the ground running”. However: “It could mean that a possible merger with AG Barr is less likely.”
Wayne Brown, analyst at Canaccord Genuity, took a different view, noting that the closures would likely have been part of a post-merger re-organisation.
“It is therefore difficult not to question the timing of this announcement and if many of the initiatives announced today are a direct result from the proposed merger with AG Barr and form part of the strategic view that the AG Barr management team had,” Brown said.
Brown also branded Britvic's H1 profits surge today as “unsustainable” and questioned whether the group raised prices and decreased advertising spend to achieve strong numbers ahead of the Competition Commission's decision on the Barr merger in July.
To see just-drinks' full coverage of AG Barr and Britvic's proposed merger, click here.
- Interview Berry Bros & Rudd CEO Dan Jago - Part I
- The threat of excess choice in beer is over-stated
- Key trends for the spirits sector in 2017 - Focus
- Signs of life in Japan's beer market - Comment
- Interview Berry Bros & Rudd CEO Dan Jago - Part II
- Pernod Ricard's Method and Madness Irish whiskey
- Pernod unveils new St Patrick's Day Jameson bottle
- Diageo faces US$68m payout after SAP court loss
- Wm Grant names Victor Jerez business director
- Premium to counter mainstream in gin - research
- Global vodka insights - market forecasts, product innovation and consumer trends
- Global rum insights - market forecasts, product innovation and consumer trends
- Battle of the Generations - The fight for iGen, Millennial, Gen X and Baby Boomer consumers
- Global Cognac insights - market forecasts, product innovation and consumer trends
- Global gin insights - market forecasts, product innovation and consumer trends