In a statement, the UK name behind brands such as J2O Tango and Robinsons squashes said it felt the terms of the deal were still not attractive enough to warrant its endorsement.
“Britvic received a new proposal from AG Barr for a merger with a ratio of 65% Britvic 35% AG Barr, which represented only a small improvement on the previous terms …” the firm said in a statement.
The offer was at a considerable discount to the current market capitalisation ratios of the two companies, stated Britvic. “The board of Britvic therefore rejected the proposal and has agreed with AG Barr to terminate discussions.”
'Performance has significantly improved'
Britvic’s chairman Gerald Corbett said: “Under [GB md] Simon Litherland’s leadership, our performance has significantly improved and this, combined with the £30M cost reduction plan and accelerating international expansion, means that our future is bright.
“The execution and delivery of this is now the absolute priority of the Britvic team. We wish Barr and its management team well. They are good people with a fine business.”
In a statement, AG Barr 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 supported by a strong balance sheet, unique brands and a well invested asset base.”
The company has not ruled out a subsequent bid for Britvic within the next six months, but given Britvic's decision today, such a move would seem likely to fail should Britvic keep improving performance.
Original deal
Under the terms of the original merger deal, announced on September 5 2012, AG Barr shareholders would receive 37% of shares in the enlarged company with Britvic shareholders gaining 63%.
The companies had hoped to clinch the transaction in January, but the Office of Fair Trading (OFT) delayed approval while it reviewed whether it would give the merged business an unfair market advantage.
When the OFT approved the plan on June 11, Panmure Gordon analyst Damian Mcneela speculated Britvic would try to renegotiate a better deal, hinting it could pull out if its requirements weren’t met.
Just yesterday (July 9), when the Competition Commission ratified the OFT’s approval, Britvic's Corbett hinted the company was having second thoughts. He said Britvic was “in a very different position to last summer when the merger was agreed.”
Investec analyst Nicola Mallard immediately responded: “Britvic highlights it is in a ‘different place’ to last summer, which, in our view, probably reduces the likelihood of a deal this time round.”