AG Barr-Britvic merger likely to be discussed at AGM

AG BARR chief executive Roger White will look to prove this week that his company can still forge a tie-up with Britvic that gives his management team authority over the enlarged drinks group.

White is likely to field questions about the deal 
at Barr’s annual general ­meeting on Tuesday, even though there are weeks left yet until the Competition Commissions declares if a merger can go ahead.

Following a strong set of results from Britvic last week, Irn-Bru maker Barr said it “remains positive” about the rationale for combining the businesses.

But some analysts saw Britvic’s update as a sign the Pepsi-bottler is stepping back from a merger.

Simon Litherland – who was appointed Britvic chief executive on the same day the deal was referred to the competition watchdog – has announced factory ­closures and job cuts to generate cost savings of £30 million by 2016.

Although similar moves were likely under a deal with Barr, some analysts believe the launch of such a major initiative makes a strong case for Britvic as a stand-alone entity.

Bryan Johnston, a director at Barr shareholder Brewin Dolphin, said a deal still looked sensible for both sides. However, given Barr’s “fierce” independence, much will depend on the authority given to its management team in any revised agreement.

“I expect the merger to be cleared and I expect the two sides to come together again to agree new terms, but whether the dynamics now work is a matter of conjecture,” Johnston said.

Canaccord Genuity analyst Wayne Brown welcomed Britvic’s strategy but added that a merger with Barr still made “commercial and strategic sense”.