A refreshing change: AG Barr merges with Britvic

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The Independent Online

The Irn-Bru soft-drinks firm AG Barr has made an audacious bid to create a new £1.4bn soft-drinks giant by merging with its far bigger but troubled rival Britvic.

Discussions over the all-share deal would see Britvic's shareholders own 63 per cent of the new company. But AG Barr's chief executive, Roger White, is in line to run the combined business if it goes ahead, squeezing out Britvic's current under-fire chief executive, Paul Moody.

A merger of the duo would create an impressive stable of leading brands with AG Barr's Irn-Bru, Tizer and Rubicon joining forces with Britvic-owned R White's lemonade, J20 and Robinsons Fruit Shoot. Britvic also makes Pepsi and 7UP in the UK under licence and Pepsi still owns a near-5 per cent stake in the firm.

AG Barr's stronger recent progress contrasts with a rocky period for Britvic, whose shares collapsed in July after it admitted problems with the cap of its Fruit Shoot drink would cost it up to £25m.

Sources said the merger would help AG Barr's push into the South, with its strength among smaller shopkeepers also dovetailing with Britvic's pub-trade presence. But Britvic's recent woes "also presented an opportunity".

The Scottish group AG Barr was started in 1875 by Robert Barr. His great-grandson Robin Barr ended his tenure as chairman in 2009, but remains on the board as a non-executive director. He is one of the three people who know Irn-Bru's list of 32 ingredients.

Britvic Group, which was established in the 1980s as the soft-drinks supplier to pubs owned by its then shareholders, Bass, Whitbread and Allied Breweries, listed on the London Stock Exchange in 2005.

The companies said the merger "would have compelling industrial logic and represents an opportunity for both companies to enhance their industry position".

Canaccord Genuity's analyst Wayne Brown said: "In our view the AG Barr management team have a very strong track record and would add significant strength to Britvic from both an operational- and financial-performance perspective."

Irn-Bru, marketed as Scotland's other national drink, was first made by AG Barr in 1901. It changed its name from Iron Brew in 1947, because it is not brewed, though it contains iron.