UK: Britvic more to lose than AG Barr if merger talks collapse - analyst
A second delay over the merger talks suggest they are more complicated than first thought, an analyst says
Earlier today (31 October) the companies announced that they have been granted another extension until 28 November to formally announce plans for a merger. This follows a previous request to the UK's Takeover Panel earlier this month.
But, Canaccord Genuity analyst Wayne Brown, said that the second extension will spark concern that the merger is “more complicated than most had initially anticipated”.
In a note, he said: “This (the delay) should come as no real surprise, considering the underlying financial challenges that Britvic faces set against the conservative and pragmatic nature of the AG Barr board.”
However, if the merger plan collapses, Brown said that there would be “little downside for Barr, but “meaningful” downside for Britvic.
“We would remain positive on AG Barr as it has long-term structural growth opportunities, with less than 5% share of the UK soft drinks market,” Brown said.
With Britvic, however, Brown said there is more caution, noting high debt levels, a pension deficit of around GBP220m (US$354.8m) and rising investment costs following the Fruit Shoot recall and the poor performance of its wider portfolio.
“We acknowledge that there is significant recovery potential within the UK business, but note the continued challenges in Ireland and France,” Brown said. “We are cautious around the ability to fully capture this recovery opportunity in the UK as a standalone business.”
To see just-drinks' full coverage of AG Barr and Britvic's proposed merger, click here.
MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organi...
The company is focused on following three main strategies in 2013 in order to maintain its presence as one of the leading soft drinks manufacturers in the UK. These are innovation, increased distribut...
Britvic requires a "significant cultural change", an analyst has warned while dismissing its chairman's claims performance has improved since it agreed to merge with AG Barr....
Barr (AG) Plc is focused on joining forces with Britvic Soft Drinks Ltd to become a joint partner company in what is expected to be the largest European soft drinks company. The formulation of the mer...
The drinks sector is particularly fertile ground for mergers and acquisition activity, with a number of big businesses accustomed to making acquisitions to spur growth, new players popping up all over...
- Comment - Diageo Spins the Guinness Wheel... Again
- Diageo's Labels Give Industry Something to Digest
- Comment - 'Craft' and the Danger of 'Romance Copy'
- Is A-B InBev/SABMiller 'Mega-Merger' Off?
- Who should Stock Spirits Acquire?
- Diageo lines up UK innovations push
- Craft is an 'abused' term - Pernod Ricard exec
- Pernod Ricard queries nutritional label use
- SPI Group 'disappointed' over Stolichnaya ruling
- Diageo's Guinness Golden Ale
- Global rum insights - market forecasts, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Champagne: Less Than Bubbly
- Beer Market Insights Africa 2014
- ALDI 2015: Radically transforming Anglo Saxon grocery markets