Regulator gives green light to Britvic AG Barr merger

The Competition Commission (CC) has approved a proposed tie-up between drinks companies Britvic and AG Barr, after airing concerns in June (Britvic release, AG Barr release).

If it were to go ahead, the deal would now create one of Europe's largest soft drinks firms, with combined revenues of around £1.5bn.

Previously the CC had raised concerns that the merger could result in a "substantial lessening" of competition, but "has fully reviewed the context of the potential transaction and has concluded that it does not expect it to result in a substantial lessening of competition".

Britvic's chairman, Gerald Corbett, commented (our emphasis):

The merger lapsed in February when the deal was referred to the Competition Commission. We would obviously consider any proposal tabled in the interests of shareholders. However, Britvic is in a very different position to last summer when the merger was agreed. We have a new Chief Executive in Simon Litherland, who has done a fantastic job in implementing his new plan for Britvic. The Board is confident of driving £30 million of cost savings over the next three years and of the enhanced international expansion opportunities. In addition, performance has improved, the merger benefits are materially less than they were and our share price is almost twice the level it was. Britvic's prospects as a stand-alone company are bright.

AG Barr's release said:

The Board of A.G. BARR believes this is a significant positive step and, in light of this, will actively reconsider a potential merger with Britvic. The Board will review all material new developments since the original merger terms were agreed but currently believes that, other than Britvic's recently announced short term cost saving plan, little has changed to alter its previous conviction that a merger represents a unique opportunity for value creation for both sets of shareholders in the short, medium and long term.