This month's announcement of a merger between
It's envisaged that the merger will leave Britvic's shareholders with a 63 per cent slice of the combined entity, but it's being structured as a reverse takeover - with Britvic's shareholders being offered 0.816 AG Barr shares for each Britvic share. And the move does have attractions. It's hoped, for example, that the deal will deliver £35m a year in cost savings, along with another £5m of revenue synergy benefits - not a bad prospect for investors in a sector that looks distinctly low growth. Should competition regulators give the go ahead, the deal is due to complete in February.
Britvic's performance, meanwhile, was hit by the need to recall its Robinsons Fruit Shoot drink. That cost £16.9m, with a further £8m hit due in 2013, and helped the GB stills division's sales to slide 8.4 per cent year-on-year. Britvic also experienced weak consumer demand, higher raw ingredient costs and a contracting pub and night club sector. Overall, underlying group operating profit slipped 15.5 per cent to £115.6m and the profit margin on that basis dropped 160 basis points to 9.2 per cent.
|ORD PRICE:||396p||MARKET VALUE:||£960m|
|TOUCH:||395-396p||12-MONTH HIGH:||411p||LOW: 250p|
|DIVIDEND YIELD:||4.5%||PE RATIO:||17|
|NET ASSET VALUE:||15p*||NET DEBT:||£512m|
The deal looks attractive and, in addition to January's dividend, Britvic will also make a special 10p a share special payment after the merger. Sure, Britvic's shares don't look cheap - they've risen 38 per cent since mid-July and now trade a little above the implied offer price. But, for those holding the shares, it looks worth hanging on. Hold.
Last IC view: Hold, 316p, 4 July 2012
visible-status-Standard story-url-Wet year for Britvic.xml