UK: Britvic lukewarm on AG Barr merger after final green light

Britvic has cast further doubt on its proposed merger with AG Barr, claiming its “prospects as a stand-alone company are bright” after the merger was given final clearance by the UK's competition authority.

In a ruling today (9 July), the Competition Commission said a merger would not lessen competition in the UK or cause wholesale prices to increase “significantly”. The deal was put on hold in February after it was referred to the commission by the Office of Fair Trading. 

However, Britvic's chairman Gerald Corbett, echoing comments he made last month when the Competition Commission gave provisional clearance to the merger, said today: “Britvic is in a very different position to last summer when the merger was agreed. 

“Performance has improved, the merger benefits are materially less than they were and our share price is almost twice the level it was. Britvic's prospects as a stand-alone company are bright.”

In May, Britvic announced a raft of cost-cutting measures it claims will save it GBP30m (US$44.9m) a year by 2016, including the closure of three UK facilities and combining its UK and Ireland units.

In contrast to Britvic's lukewarm response, Barr today welcomed the commission's decision, saying it “believes this is a significant positive step and, in light of this, will actively reconsider a potential merger with Britvic”.

It added: “Other than Britvic’s recently announced short term cost saving plan, little has changed to alter its previous conviction that a merger represents a unique opportunity for value creation.”

The merger, which was first proposed in September, would create Barr Britvic Soft Drinks, one of Europe's largest soft drinks firms.

Meanwhile, the UK's Takeover Panel said today Barr must make a "firm intention to make an offer for Britvic" by 5pm on 30 July.

To see just-drinks' full coverage of AG Barr and Britvic's proposed merger, click here.