Mixing J20 and Irn-Bru may not sound very appetising, but that is what the companies behind the two soft drink brands are planning.
Britvic, the J20 owner whose other brands include Fruit Shoots and Tango, has confirmed reports of a proposed all share merger with Scottish Irn-Bru maker AG Barr. If the deal goes ahead it would create one of Europe's leading soft drink companies, although Britvic warned discussions were at an early stage. The two have agreed that Britvic shareholders would own 63% of the enlarged company, with AG Barr investors accounting for the rest.
Barr's chief executive Roger White would take that position in the enlarged group, with Britvic chairman Gerald Corbett keeping his role.
Both companies had suffered from the poor weather earlier in the summer, with Barr warning at the end of July that interim profits would be below the previous year's level.
Britvic also left itself vulnerable to a bid following the £25m hit to profits from recalling Fruit Shoots after a design fault in the caps.
Wayne Brown at Canaccord Genuity said he believed the merger discussions could already be well advanced, despite the statement's caution:
We would also assume (not confirmed by either party) that with PepsiCo's change of control clause within its bottling contract with Britvic, that they have agreed to the proposals laid out today. This would remove the largest risk the merger.
He said the merger terms suggested a price of 350p per Britvic share, and said the company was now firmly in play.
In the market, Britvic has jumped 28.4p to 357p while Barr is 7.9p better at 423.5p.
At the current share prices Britvic is valued at £863m, Barr at £494m and the combined group at nearly £1.4bn.
Given Britvic is above Brown's 350p target, the market seems to be entertaining the possibility of a rival bid, with the likes of Diageo mentioned as possible predators in the past.
