UK: AG Barr, Britvic merger threatens site closures - analyst
Barr Britvic Soft Drinks has said it will shed up to 500 jobs
Wayne Brown of Canaccord Genuity said “synergy benefits” totalling about GBP35m (US$55.45m), announced yesterday, were light and Barr Britvic is “holding a lot up its sleeve”. Brown said a capital-efficiency project likely to take place once the merger completes in February will identify more savings.
“Could that lead to the closing of two or three of Britvic's manufacturing facilities? One would assume so,” Brown told just-drinks, adding that Barr's upcoming production facility in Milton Keynes will be the catalyst for the closures.
The company will also take a look at Britvic's operations in France and Ireland, he said. Brown added that France is a “non-core business” for the company and its brands should be sold-off or dumped.
Barr Britvic has said up to 500 jobs, 12% of its workforce, could go in the three years after the merger is completed.
Vasu Majumdar, a beverage specialist at Grant Thornton UK, said there will be some brand repositioning within Barr Britvic, with CEO Roger White getting rid of weaker labels. However, Majumdar said judging from White's past actions there is room in the new venture for all of Barr and Britvic's best-performing brands, with none likely to be given flagship status.
“AG Barr has never had a mother brand,” he said. “It has always been known for Irn Bru but since buying Rubicon, White has managed to keep those businesses separate, with each brand having its own marketing team.”
Majumdar also described the merger as “effectively a reverse takeover” and that the new venture will have to be careful over how it deals with Britvic's debts.
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