Irn Bru

The Competition Commission has provisionally cleared the AG Barr-Britvic merger

The Competition Commission has provisionally cleared the proposed merger of Britvic and AG Barr but Britvic has indicated it would drive a hard bargain if merger talks resume. 

The deal to create a £1.5bn soft drinks giant lapsed when the OFT referred it to the Commission in February. But in its provisional findings the Commission found no reason to block a deal.  

“Most consumers tend to see Barr and Britvic brands as distinct products rather than as close substitutes for each other. Looking at consumer preferences and other evidence, we were able to conclude that the proposed merger was unlikely to substantially lessen competition,” said the Commission’s deputy chairman, Alasdair Smith.

The Commission is now expected to rubber-stamp the deal at the end of July. No merger can be formally agreed before this time.

Both AG Barr and Britvic said they welcomed the news. AG Barr said it would continue to work with the Commission for the remainder of the inquiry with a view to reconsidering a merger.

However, Britvic said it was in a different place and would have to consider its next move in light of what had been achieved since the merger was originally agreed. Most recently, Britvic revealed a plan to cut costs by £30m per year.

“Our company is in a different place to last summer when the terms of the merger were agreed. The cost savings from merging are less, we are performing better, we have new management and we have a new strategy to deliver good growth internationally as well as in the UK,” said Britvic’s chairman Gerald Corbett.

Britvic’s brands include Robinsons, J2O, Mountain Dew and Lipton Ice Tea. AG Barr makes Irn-Bru, Orangina and Tizer. Announcing plans for the merger in September, Britvic said the tie-up had “compelling industrial logic”.

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