Britvic plc is a big company. Last year, it sold 1.9bn
litres of soft drinks and it employs approximately 3500
people. Brands include Tango, J2O, Robinsons as well as its
eponymous mixer drinks. It has a Scottish-based rival called
A G Barr plc, makers of the iconic Scottish drink, Irn Bru (made
from girders!), as well as Tizer and other well-known brands.
A G Barr is also a big player in the soft drinks market with a
turnover last year of £237m.
Last year, there was heady talk of a merger between the two
businesses. In September, a planned all-share merger between
the two companies was announced, the plan being that the merger
would take place in November. The deal would have seen
Britvic's shareholders emerge with 63 per cent of the enlarged
company but Roger White of Barr become chief executive. That
deal lapsed in February when the Office of Fair Trading referred it
to the Competition Commission. And there, it seemed, the
matter was closed - until, that is, the Competition Commission gave
its provisional approval for the deal this month.
Meanwhile, in February 2013, Britvic appointed a new chief
executive, Simon Litherland, and he immediately embarked on a
rationalisation plan for the business, including the closure of two
factories and expansion of the business in the emerging market of
India. This plan, as far as Litherland and the Britvic board
were concerned, "reduced the synergies from a merger with Barr from
£40 million to £25 million" (the Times, 12 June 2013).
In the light of this, Britvic has let it be known that Mr
Litherland would now take the top job in the event of the merger
going ahead and that furthermore Britvic's investors should receive
a bigger slice of the pie as the price for agreeing a new merger
In negotiating terms, this is one of two tactics
- either Britvic is structuring expectations away from the
original deal in the light of changed circumstances
- or (and I wonder if this is not more likely) putting any merger
"out of bounds" by attaching a condition that they know the other
side will find unacceptable.
Although A G Barr issued a short statement welcoming the
statement from the Competition Commission, it is widely believed
that the founding Barr family, which speaks for almost 30 per cent
of the shares, would not countenance handing the reins to Mr
Litherland - making the prospect of a merger highly
Watch this space.