British soft drinks maker Britvic today announced plans to cut costs and expand in India, hoping to strengthen its position in case regulators reject a proposed merger with rival AG Barr or it has to renegotiate a deal.
It also said it would create a combined British and Irish business unit under a single leadership team
Britain's Competition Commission is expected to decide by July whether Britvic, whose brands include Robinsons, Tango and Fruit Shoot, can combine with Irn-Bru maker AGBarr to create one of Europe's biggest drinks firms.
The two companies agreed an all-share deal in November, but that lapsed in February when the CC launched its investigation.
The two firms have said they will return to the negotiating table, depending on what the regulator says.
Britvic said today it was focusing on its existing business and new chief executive Simon Litherland, who took the helm in February, unveiled plans to make £30m stering of annual cost savings, including over 300 job losses.
The group also said it had struck a deal with Indian consumer goods company Narang Group to sell and distribute Fruit Shoot in the world's second most populous country from the middle of next year.
Analysts said the moves would put Britvic in a better position to cope if the merger with AG Barr falls through or to secure a better deal if it is cleared by the CC. Under the original merger deal, Britvic shareholders would have got 63% of the combined company, with AG Barr investors holding the rest.
The tie-up would create a group with greater buying power and could allow AG Barr to benefit from Britvic's ties with big UK retailers, while Britvic could benefit from AG Barr's relationship with independent firms.
Britvic, which produces PepsiCo Inc brands such as Pepsi, Mountain Dew Energy and 7UP in Britain and Ireland, also posted a 28% rise, using constant exchange rates, in first-half operating profit to £52m. As a result, it forecast a full-year operating profit towards the upper end of its previous guidance range of £125-131m.
The company said that while the Irish market remains challenging, its own own brands continued to outperform the market. Volumes sold in the 28 weeks to April 14 were down 5.6%, while revenue for the period declined by 7.6% to €67.2m from €72.7m.
Britvic said it aimed to achieve the £30m a year of cost savings by 2016. The plan includes closing UK factories in Chelmsford and Huddersfield, as well as a warehouse in Belfast by the first three months of 2014. The new strategy, including the loss of over 300 jobs from closures, would reduce group headcount by between 10-15% overall, it said.
