In a deal worth as much as £1.4bn, AG Barr could about to ‘be Tangoed’. The two soft drinks makers are in talks to merge their operations, resulting in a sprawling portfolio including Britvic’s range of mixers, J20, Robinsons, Fruit Shoot and AG Barr’s Tizer, Rubicon and, of course, Scotland’s other national drink: Irn-Bru.
Under the proposed terms of the merger, Britvic investors will end up with 63% of the group’s equity, with AG Barr shareholders holding the remaining 37%. The merger will also involve a management shake-up: Roger White, AG Barr chief executive, will lead the combined group and inherit John Gibney, Britvic’s chief financial officer as his new CFO. Britvic’s chairman will become chairman of the new group: AG Vic? BritBarr? While AG Barr’s chairman takes the deputy chairman role.
A statement from Britvic today reads: ‘Discussions are at an early stage and, whilst there can be no certainty at this stage that such discussions will conclude successfully, agreement has been reached with respect to certain key aspects of the merger.’
Indeed, AG Barr could soon face some competition. With around 40% of Britvic’s revenues coming from selling PepsiCo brands under an exclusive licence, there could be a counter bid from PepsiCo on the table soon. AG Barr’s sales, however, are generated solely from its own brands.
Rivals might need to watch out if the two do join forces. Any company which produces both Tango and Irn-Bru would be a force to be reckoned with. Shares in both companies have bubbled up today, with Britvic up 11% to 365.9p and AG Barr up 3% to 429p. This values the companies at £890m and £500m respectively.