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AG Barr signs merger agreement with Britvic

AG Barr chief executive Roger White insisted it was "simplistic" to suggest decision making will move south after he signed an agreement to merge the Irn-Bru maker with soft drinks rival Britvic and locate its operational headquarters in Hertfordshire.

IN THE CAN: Roger White, chief executive of AG Barr, left, and John Gibney, finance director of Britvic have sealed the deal. Picture: Chris Winter
IN THE CAN: Roger White, chief executive of AG Barr, left, and John Gibney, finance director of Britvic have sealed the deal. Picture: Chris Winter

The deal, which could see upwards of 500 jobs cut from the combined workforce, will create a cross-border behemoth called Barr Britvic Soft Drinks, with annual sales of more than £1.5 billion from brands including Robinsons squash and Tizer.

If shareholders back the deal, its registered and legal headquarters will be in Cumbernauld, while the operational headquarters will be in Hemel Hempstead, north of London, where Britvic moved earlier this year from its previous Essex base.

Mr White, who will head the combined company, said he would "work across multiple places" and will have offices in both locations.

Asked if decision-making will occur in Hertfordshire, he said: "That is a simplistic way to look at it. There is a significant number of people based in Hemel Hempstead, which will be retained as the operational headquarters.

"But there will be an important and continued presence in our Cumbernauld office, including the registered office and the legal entity stuff associated with that.

"Who will work where, if you like, we haven't made any comments on yet because that is still subject to be fully reviewed.

"The key decision makers will be where the decisions need to be made", he said, adding there was a need for an increasingly mobile workforce.

The deal comes after the disappearance of a number of Scottish headquartered listed companies such as Robert Wiseman Dairies, swallowed by Germany's Muller Dairy, and Scottish & Newcastle, which split between Heineken and Carlsberg.

In some cases, such as Lloyds Banking Group, created from the merger of Lloyds TSB and HBOS, the registered office is in Scotland but the functional headquarters are in London.

Between 8% and 12% of jobs will be axed from the combined AG Barr-Britvic workforce, which could mean upwards of 500 posts going, as Mr White pursues £40 million of savings.Britvic currently employs 3300 people and AG Barr 980. If the job cuts were shared proportionately as many as 118 AG Barr workers would lose their posts. Mr White said it had not been determined where jobs would be cut. "We have created a range of scenarios," he added.

AG Barr has production sites in Forfar in Angus and Pitcox, East Lothian, as well as at Cumbernauld and Tredegar in Wales.

Gregg McClymont, Labour MP for Cumbernauld, Kilsyth and Kirkintilloch East, welcomed the retention of the headquarters in Scotland but called for more information about the impact on jobs.

Jamie Hepburn, MSP for Cumbernauld and Kilsyth, said: "What we need is real clarity about what this means on a practical level."

Britvic shareholders will own 63% of the new company and Barr shareholders 37%.

Chairmanship of the 108-year-old AG Barr passed outside the family for the first time in 2009, when Robin Barr ended his 31-year tenure.

Mr Barr is among the directors of AG Barr who have pledged to back the merger.

Britvic's chairman Gerald Corbett will become the non- executive chairman of the combined group with AG Barr chairman Ronald Hanna as deputy. Mr Corbett said: "Together we will create a bigger, better and stronger business for our consumers, customers and shareholders for now and the future."

The deal needs to be backed by 75% of Britvic investors and half of AG Barr's.

AG Barr's shares rose 18.6p, or 4.3%, to 450.8p, while Britvic closed up 18.7p, or 5.1%, at 387p.

Phil Carroll, analyst at Shore Capital, said: "We believe the announcement is good news for both sets of shareholders and we believe it should result in the creation of a strong soft drinks business."

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