Britvic and AG Barr Agree Merger
UK soft drinks producers Britvic and AG Barr have agreed to merge to create Barr Britvic Soft Drinks, one of the leading soft drinks companies in Europe, with annual sales of over £1.5 billion, a portfolio of strong brands and significant prospects for future growth. The combined group will possess an attractive portfolio of strong and differentiated brands (including Irn-Bru, Robinsons, Fruit Shoot, J2O and Rubicon), with its portfolio well represented in key sub-segments of the soft drinks market.
The enlarged group’s brand portfolio will benefit from enhanced routes to market and is expected to drive opportunities for further revenue growth. Internationally, the new group will enjoy significant presence in France and Ireland, and growing distribution of proprietary brands in markets such as the US. Barr Britvic Soft Drinks’ strategy will focus on creating value by driving both the availability of its brands and operational efficiency.
Britvic shareholders will own 63% of the combined business with and AG Barr shareholders the remaining 37%.
Integrating Britvic with AG Barr is expected to yield recurring annual cost synergies of approximately £35 million 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 £5 million from annual net revenue synergies through utilising the combined distribution channels, brand portfolios and geographic presence. The boards expect to build up synergies progressively to achieve aggregate synergies of £40 million in 2016.
Barr Britvic Soft Drinks will have a proven management team to be led by the current AG Barr CEO, Roger White with John Gibney, the current CFO of Britvic, as CFO of the combined group. Gerald Corbett, the current Britvic non-executive chairman, will become the non-executive chairman of the combined group, and Ronald Hanna, the current chairman of AG Barr, will become the non-executive deputy chairman of Barr Britvic Soft Drinks.
The merger is conditional on the approval of AG Barr shareholders and Britvic shareholders and OFT clearance.
