AG Barr to make a bid for Lucozade and Ribena

By Rick Pendrous

- Last updated on GMT

AG Barr is reported to be preparing a bid for GlaxoSmithKline's Lucozade and Ribena soft drinks
AG Barr is reported to be preparing a bid for GlaxoSmithKline's Lucozade and Ribena soft drinks
Soft drinks manufacturer AG Barr is reportedly considering making a £1bn bid for the Lucozade and Ribena businesses that GlaxoSmithKline (GSK) has put up for sale.

The news, which the Scottish maker of Irn-Bru has refused to confirm, comes shortly after merger talks collapsed between itself and rival Britvic. Last month Britvic rejected an improved offer from AG Barr, which followed the Competition Commission giving its clearance for the proposed merger.

GSK announced in April that it hoped to sell-off the two drinks brands by the end of the year to concentrate on its more core healthcare activities.

As well as reports of interest in the business from AG Barr, other names that have come into the frame include the Japanese spirits giant Suntory.

Prospects

Analysts speaking to FoodManufacture.co.uk welcomed the prospects of a deal between AG Barr and GKN. But one warned that AG Barr could be seen to be acting in too great a haste following the collapse of its talks with Britvic.

Damien McNeela, an analyst with Panmure Gordon, suggested that the implied valuation range of £1bn1.2bn for Lucozade and Ribena meant that it made sense for AG Barr to team up with a private equity business in order to secure a deal.

Cost savings would be a driver behind the deal, said McNeela. "We think cost savings could be quite significant given the scope to close plants and bring production into its new Milton Keynes site."

Ribena and Lucozade reportedly had sales of £600M last year.

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