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.
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