LONDON (Reuters) - Soft drink firms Britvic (BVIC.L) and A.G. Barr (BAG.L) said they would work together to keep their proposed merger, worth about 1.6 billion pounds, alive after the deal was referred to Britain’s Competition Commission.
As well as Pepsi drinks, the tie-up would see Britvic pair brands like Robinsons and Tango with Barr’s Rubicon and Irn-Bru, the orange fizzy drink that outsells Coca-Cola in Scotland.
The merger to create a one of Europe’s biggest drinks firms was referred by the Office of Fair Trading to the regulator on Wednesday due to competition concerns over certain brands.
Britvic and Barr said on Thursday there was compelling rationale for clearance and that they would be able to demonstrate the deal would not substantially reduce competition.
“The boards of A.G. Barr and Britvic therefore intend to work together with the Competition Commission (CC) during its investigation with a view to seeking clearance of the proposed merger,” the two firms said in a statement.
The CC’s investigation is expected to take six months. The companies said that if clearance were obtained they would reconsider the terms of the merger at that time.
Shares in Britvic, which makes and sells PepsiCo Inc’s (PEP.N) brands in the UK and Ireland, were down 8 percent to 386.45 pence at 6:04 a.m. ET, with smaller rival and Irn-Bru maker Barr down 2.2 percent to 506 pence.
Reporting by Neil Maidment. Editing by Jane Merriman