Analysis - Britvic merger green light reaction "perplexing"
The chances of a merger has reduced, analysts suggest
Earlier today, the UK's Competition Commisssion said it has provisionally cleared the tie-up, which will create one of Europe's largest soft drinks groups. However, comments made by Britvic's chairman, Gerald Corbett, have surprised analysts.
Corbett said: "Our 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 internationally as well as in the UK."
But, in a note, Cannacord Genuity analyst Wayne Brown said the comments were "perplexing". He noted that it was only in February that Britvic's board backed the merger.
Brown added: "We were always of the view that the merger was much more than just cost savings; strengthening the balance sheet, improving the depth and breadth of management across many levels, increasing the balance of revenues towards owned brands and a major infrastructure rationalisation project."
He said the track record of Barr's management was in "no doubt" and Britvic remains a "highly indebted business". Last month, Britvic announced that it is closing three sites, cutting jobs and merging its UK and Ireland units.
Meanwhile, Investec said it still expected the companies to resume discussions, but "suspects the likelihood of a new deal being agreed has fallen in light of Britvic’s recent actions".
Brown also suggested that with the commission finding no issues with the merger, it "clears the way for future M&A in the sector".
To see just-drinks' full coverage of AG Barr and Britvic's proposed merger, click here.
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