Irn-Bru maker AG Barr buys one of UK's top sports drink brands for up to £32m
The iconic Scottish drinks firm said the deal formed part of plans to develop its portfolio in “high growth and functional categories”. The Boost brand, founded in 2001, primarily operates in the “functional beverage” sector spanning energy, sport and protein, with a strong market position in the UK independent retail channel. Bosses said “significant potential” existed for further growth and development of the product portfolio.
Barr has acquired 100 per cent of Boost’s issued share capital for an initial consideration of £20m, funded from cash reserves. An additional payment of up to £12m will be dependent on future revenue and profitability performance of the Boost business over a two year period, payable in cash.
Roger White, chief executive of AG Barr, said: “Today’s announcement is further evidence of our strategy to continue to grow the business through targeted acquisitions, with a particular focus on developing within high growth and functional categories. Boost is one of the UK’s most recognisable functional drinks brands, and we are delighted to welcome the team into the AG Barr group.”
He added: “The Boost portfolio offers premium taste and performance at a competitive price, with a strong market position in the UK independent retail channel. With AG Barr’s proven track record of acquiring and developing attractive brands such as Rubicon and Funkin, I look forward to working with Simon [Gray] and the team to ensure Boost continues to grow and develop under our ownership.”
Simon Gray, founder and chief executive of Boost Drinks, said: “I’m hugely excited to embark on the next phase of Boost’s growth with AG Barr. Over the past 20 years Boost has proven its popularity with consumers who want great tasting, high performing functional drinks that offer great value for money and I am sure that as part of the AG Barr group we will maintain our strong growth trajectory.”
For the year ended December 31, 2021 Boost’s unaudited statutory revenue and profit before tax were £42.1m and £1.9m.
Analysts at house brokerage Shore Capital noted: “Boost operates an asset light business model with production, warehousing and logistics all outsourced. We believe there is the potential for elements of the Boost model to be brought in house by Barr over the medium term.
“Barr has a high quality stable of UK brands that deliver attractive mid-teens margins and sustained cash generation, which alongside a strong balance sheet has supported two acquisitions in higher growth functional beverage categories within the past 12 months. Whilst short term challenges are present, notably the weak UK consumer economy and high cost inflation, we see the current valuations as undemanding.”
In September, Barr said it would take “appropriate mitigating action” to keep a lid on costs as it faces up to the cost-of-living crisis and spiralling input costs. The firm warned that the squeeze on discretionary consumer spending was likely to impact purchasing behaviour in the months ahead as it reported a strong first-half performance.
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