IRN-BRU maker AG Barr yesterday walked away from its £1.9 billion reverse takeover of Pepsi bottler Britvic, leaving the door open for further expansion south of the Border.
The Cumbernauld-based firm had unveiled an all-share merger with the owner of Robinsons fruit juice last September, creating a soft drinks giant to begin rivalling Coca-Cola in the UK.
But the Office of Fair Trading referred the deal to the Competition Commission over concerns it would harm the market in Scotland.
Those fears were rejected by the commission, which only issued its final ruling on Tuesday to give the deal the green light.
Barr revealed it had then made a revised offer – which was on “more favourable terms for Britvic shareholders” – but the deal was rejected by Britvic. Barr – which also makes Orangina, Rubicon and Tizer – is now walking away from the deal.
Chairman Ronnie Hanna said: “While we are disappointed that the opportunity to create significant value for both sets of shareholders has been rejected, the board of AG Barr has every reason to be confident of its position as a stand-alone company.
“AG Barr continues to outperform the UK soft drinks market and will follow its successful long-term strategy.”
Shares in Britvic, under new chief executive Simon Litherland, have climbed since September’s statement, with the combined value of the companies rising to £1.9bn from £1.4bn.
Britvic chairman Gerald Corbett said the prospect of £30m of cost savings over the next three years meant the merger benefits are “materially less than they were’’.
Corbett has been fiercely critical of the OFT’s decision in February to refer the merger to the commission.
The watchdog eventually ruled that the proposed tie-up would not have affected choice in Britain’s £11.2bn soft drinks market.
Britvic claimed the new proposal from Barr, which would have seen the enlarged group made up of 65 per cent Britvic and 35 per cent Barr, was rejected as it represented only a “small improvement” on the previous offer, which had proposed a 70-30 split.
Corbett added: “We wish Barr and its management team well. They are good people with a fine business.”
One City source said Barr had been left with “little choice” but to walk away because Britvic was being “greedy” in looking for a larger stake in the combined company for its shareholders.
Phil Carroll, an analyst at Shore Capital, said: “I’m pleased to see that Barr has been sensible and hasn’t pursued the deal at any price.
“I think it will look at acquisitions again, but the immediate focus will be capitalising on the better weather this summer.”
Numis Securities analyst Charles Pick added: “I don’t think this makes Barr vulnerable as a takeover target.
“It will focus on its new bottling plant at Milton Keynes, which will help it grow sales in England, because it will not have to move raw materials and finished goods up to Cumbernauld.”
Shares in Barr edged up 0.5p to close at 522p, while Britvic fell 10p to end the day at 512p, a drop of nearly 2 per cent.