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Britvic and AG Barr–A Marriage Still in Waiting?

17 June 2013

The merger between Britvic and AG Barr has still not been confirmed, after the UK’s Competition Commission gave its provisional blessing to the merger last week.

The merger was initially announced in September 2012. If this becomes a reality, it will be one of Europe’s largest soft drinks producers and bring significant changes to the UK soft drinks market. According to Canadean, the proposed new company, Barr Britvic Soft Drinks, would rank number five in the European soft drinks brand owner ranking, and hold an estimated 17% share of throat of the UK soft drinks market.

Britvic and AG Barr – A Marriage Still in Waiting? - Chart

The core strength of AG Barr’s portfolio is their carbonates category, fronted by its iconic Irn Bru brand. With the purchase of the Strathmore water company in 2006 and the tropical drink producer, Rubicon in 2008, AG Bar has become a significant player in both the packaged water and still drinks market.

Britvic’s product range covers almost the entire soft drinks spectrum. Robinsons squash continues to be their largest brand. The company’s purchase of the French Fruite Enterprises in 2010 added another renowned squash/syrups brand to its portfolio. In recent years Fruit Shoot has been Britvic’s third best selling soft drink. However, the sales of the popular drink took a significant hit following last summer’s product recall.

Britvic and AG Barr – A Marriage Still in Waiting?

The merger was first initiated back in February 2013. However, the deal fell apart when the Office of Fair Trading referred the merger to the anti-trust watch dog. Even after the lapse of the deal the two companies appeared positive on the outcome of the inquiry. The following investigations into the brands seemed to satisfy the Commission who gave their provisional blessing.

Recent results for AG Barr suggest that its core brands have performed well year to date, contributing to a 2.4% growth in revenue.

The main focus for Britvic has been international expansion and cutting costs, including three UK plant closures. 2013 was a good year for Fruit Shoot with new distribution agreements with the US and Spain – and with India in the pipeline. Despite a prolonged winter and challenging sales, Britvic saw positive growth in the first half year of 2013. 

Britvic’s veiled response to the ‘green light’ last week has left the industry rife with speculation as to whether the deal will go ahead once the Competition Commission releases its final report at the end of July. It would seem that the stage is set for a further round of negotiations between the boards of Britvic and AG Barr. Still, the jury is out on the likelihood of an eventual marriage.

 

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