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UK: AG Barr, Britvic merger delayed but still on - analyst

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The AG Barr and Britvic merger can still go ahead but will face a six to 12 month delay, an analyst has said.

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Wayne Brown, analyst at Canaccord Genuity, today (14 February) called the Office of Fair Trading's (OFT) decision to refer the deal to the Competition Commission “rather bewildering” but said that both companies should continue to work towards their goal. “We remain confident that this referral represents a delay to the merger and remain confident of a positive resolution,” Brown said.

The note was released just ahead of the companies confirming they will fight their case with the Competition Commission

Yesterday, the OFT said the referral was due to concerns it could reduce competition between Britvic's Pepsi and Tango brands and Barr’s Irn Bru and Orangina brands.

Brown said competition concerns could be dealt with through the termination of licensing Orangina in the UK, and the sale of smaller non-core brands. He also noted that Orangina only accounts for about GBP5m (US$7.7m) to GBP10m in sales for Britvic: “Hardly a competitive stumbling block in a soft drinks market worth GBP9bn.”

Shareholders from both companies has previously approved the merger last month and it had been expected to complete by the end of February.


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