AG Barr’s failed attempt to merge with soft drinks rival Britvic has cost the Irn Bru maker £4.9 million, it admitted today.
As a result of the costs involved in the failed merger, the company, which also owns the Rubicon and Rockstar energy drink brands, saw interim pre-tax profits fall to £13.2 million in the six months to the end of July, compared with £14.8 million last year.
Barr chief executive Roger White said: “It’s certainly disappointing. We took an opportunistic situation with Britvic and saw real value for us and them. We were days away from completion when we were referred to the Competition Commission.”
The referral saw the deadline for a deal pass, and by the time it had been cleared by officials, Britvic demanded better terms after cutting costs and implementing expansion plans.
The total figure of £4.9 million for the failed merger came from the company adding an extra £3.4 million today to the £1.5 million previously revealed. No further charges are expected.
Despite the fall in profits, sales in the period were up 5.8% from £121.6 million to £128.7 million, with volumes up 4.2%. Fizzy drink volumes increased by 7% and still drinks by 2%, helped by the hot summer weather.
Had the merger been successful, Barr and Britvic, which makes Robinsons fruit drinks, would have been one of the biggest drinks companies in Europe.
However, the Office of Fair Trading decided to refer the merger over fears that it could lead to a rise in wholesale prices among their brands, which also include Tango, Orangina and Lipton Iced Tea.
White was disappointed by the OFT’s decision and said he believed it should never have been referred, “but then the OFT is a bit like a referee: you never get told ‘well done’ for making a right decision; instead everyone hates you when you get something wrong.
“These things happen and our business is in very good health.”