Commenting after the commission ruled that a potential merger would not result in a substantial lessening of competition, Britvic’s chairman, Gerald Corbett, hinted at a change of heart in a statement titled ‘Competition Commission clears possible merger’.
“Britvic is in a very different position to last summer when the merger was agreed,” said Corbett.
Since then, Britvic had appointed Simon Litherland, who had “done a fantastic job” in implementing his new plan for Britvic, he added.
Also, the board was confident of driving £30M of cost savings over the next three years and reaping the rewards of “the enhanced international expansion opportunities”.
‘Expansion opportunities’
Corbett added that Britvic’s performance had improved, noting that “the merger benefits are materially less than they were and our share price is almost twice the level it was”.
Consequently, “Britvic's prospects as a stand-alone company are bright,” he said.
But Corbett pledged to consider any proposal tabled in the interests of shareholders.
AG Barr dismissed as speculation any suggestion that Britvic might wish to renegotiate or abandon merger talks.
A spokesman told FoodManufacture.co.uk: “We have set out very clearly that we will actively reconsider [the merger with Britvic] in the light of what has gone on.”
Its statement, more positively titled ‘Competition Commission Final Clearance’, AG Barr described the ruling as “a significant positive step” and confirmed its intention to reconsider a potential merger with Britvic.
But, unlike its prospective merger partner, it believed “little has changed” since the original merger terms were agreed.
‘Little has changed’
“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,” according to the AG Barr statement.
Meanwhile, last month City analysts widely predicted that Britvic would seek improved merger terms, after the commission issued provisional approval on June 11.
Speaking last month, Panmure Gordon analyst Damian McNeela noted: “Arguably, Britvic is not the wounded animal it was last year.”
While McNeela believed the merger continued to make sense, he forecast Britvic would seek improved terms given the progress the business had made over recent months.
Investec analyst Nicola Mallard agreed that a merger was not a foregone conclusion. “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,” said Mallard.
Under the terms of the original merger deal, AG Barr shareholders would receive 37% of the shares in the enlarged company with Britvic shareholders receiving 63%.
Britvic makes PepsiCo brands in the UK under licence, along with Tango, 7UP, and Lipton Ice Tea.
AG Barr makes Bru, Tizer and Strathmore Water.