Barr and Britvic cocktail finally mixed

J20 and Irn-Bru sounds like a disgusting combination and hopefully J20 maker Britvic and Irn-Bru maker AG Barr won't market a cocktail of the pair now the two giants of the UK soft drinks industry have agreed on a merger.

J20 and Irn-Bru sounds like a disgusting combination and hopefully J20 maker Britvic and Irn-Bru maker AG Barr won't market a cocktail of the pair now the two giants of the UK soft drinks industry have agreed on a merger.

Under the terms of the merger, which has been brewing for at least two months, Britvic shareholders will receive 0.816 AG Barr shares for every Britvic share held. Assuming the merger goes through, Britvic shareholders will end up controlling 63% of the combined company and AG Barr shareholders 37%, but the Barr name gets top billing in the new name of the group, which will be Barr Britvic Soft Drinks.

As for the divvying up of management positions, AG Barr's Chief Executive Officer (CEO), Roger White, will hold the same position in the combined group, while John Gibney, currently CEO of Britvic, will be Chief Financial officer of the combined group.

Gerald Corbett, the current Britvic non-executive Chairman, will become the non-executive Chairman of the combined group, while Ronald Hanna, the current Chairman of AG Barr will be his deputy. The combined entity's board will also include a further six non-executive directors, three nominated from each of AG Barr's and Britvic's boards.

The directors have identified recurring annual cost synergies of around £35m through combining the two companies. These savings will be achieved through overhead savings, procurement savings and supply chain enhancements. In addition to these cost synergies, the boards of AG Barr and Britvic believe that the merger will provide an opportunity to achieve a contribution of at least £5m from annual net revenue synergies through using the combined distribution channels, brand portfolios and geographic presence of the combined group. The directors expect to build up aggregate full run rate synergies of £40m by 2016.

The combined group will have a formidable portfolio of brands, including Irn-Bru, Robinsons, Fruit Shoot and J20 while Britvic also enjoys a strong relationship with US soft drinks leviathan, Pepsi Cola; Pepsi has given the thumbs-up to the merger.

AG Barr and Britvic both intend to pay dividends in respect of the period up to the date the merger becomes effective, with AG Barr lobbing out a second interim dividend of 7.4p per share to be paid to shareholders on the register on January 4th 2013 and Britvic paying a second interim dividend of 12.4p in lieu of the final dividend for the financial year ended September 30th, 2012.

"AG Barr and Britvic are a fantastic fit with complementary strengths in products, channels and geographies and we will benefit from very significant synergies. Together we will create a bigger, better and stronger business for our consumers, customers and shareholders for now and the future," declared Gerald Corbett, Britvic's non-executive Chairman.

His counterpart at AG Barr, Ronald Hanna, said: "The new business will enjoy significant growth potential in all sectors of the market through diversified and enhanced routes to market and the potential of increased international exposure. With a clear strategy, strong management team and tight financial control, the union of our two businesses will create real future potential."

CommentBritvic, head-quartered in Hemel Hempstead, Hertfordshire, had been considered to be "in play" after declining sales trends were exacerbated by the recall of its Robinson's Fruit Shoot product in July, after the company became concerned that the new bottle design might prove a choking hazard.

Its smaller Scottish rival has been more sure footed of late. Famous for its Irn Bru - the only fizzy soft drinks brand in the world to outsell Coca Cola in one national market (Scotland) - the eye-catching growth in recent years has come from the fruit juice side of the business. With Britvic's partner, Pepsi, on board with the idea, the merger of the two looks like a logical combination, and makes a pleasant change from iconic British brands passing into the hands of forked-tongued overseas operators, though that comment may need revising if Scotland votes to leave the United Kingdom ...

Recommended

The top funds to invest in
Funds

The top funds to invest in

As market volatility and recessionary fears continue, here are the most popular funds, stocks and trusts investors are putting their money into accord…
2 Feb 2023
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
23 Jan 2023
The top ten dividend stocks in the FTSE 250
Share tips

The top ten dividend stocks in the FTSE 250

The average FTSE 250 dividend yield is around 4%, but many stocks yield much more. Rupert Hargreaves picks the best FTSE 250 stocks for income investo…
17 Jan 2023
Investing trends to watch out for in 2023: what analysts say
Investment strategy

Investing trends to watch out for in 2023: what analysts say

What are sensible strategies for high inflationary times? We ask analysts to find out.
22 Dec 2022

Most Popular

Best savings accounts – February 2023
Savings

Best savings accounts – February 2023

Interest rates on cash savings are making a comeback. We look at the best savings accounts on the market now
3 Feb 2023
When will interest rates go up?
UK Economy

When will interest rates go up?

Interest rates are now at 4%, and they could rise further in the months ahead.
3 Feb 2023
NS&I brings back one-year fixed bonds with highest rates since 2010
Personal finance

NS&I brings back one-year fixed bonds with highest rates since 2010

NS&I’s one-year fixed bonds are back on sale after being pulled off the market in 2019 - but is the rate any good?
1 Feb 2023