AG Barr has walked away from a deal with Britvic after a new all-share bid was knocked back.

The Cumbernauld company said the offer it made was on more favourable terms for Britvic shareholders than the agreement which was days away from completion in February when the Office of Fair Trading (OFT) referred the transaction to the Competition Commission (CC).

The original terms would have seen AG Barr shareholders owning 37% of the enlarged group with Britvic stakeholders taking the rest.

However, the amended proposal, submitted following discussions between the two boards, was yesterday rejected by Britvic.

It said the new offer was only a "small improvement" on the original terms and would have seen its stakeholders having 65% of the shares.

The rejection led AG Barr to decide not to return again with further offers.

Under the terms of the Takeover Code AG Barr is prevented from making a further approach to Britvic for six months.

The Robinsons and Fruit Shoot maker had indicated earlier this week it thought its future as a standalone company was bright even though the CC gave its full clearance for a deal to go ahead.

Ronnie Hanna, AG Barr chairman, admitted the company would have liked to have come to an agreement with Britvic but the Irn-Bru maker is confident of continuing to outperform its peers.

He said: "While we are disappointed that the opportunity to create significant value for both sets of shareholders has been rejected, the Board of AG Barr has every reason to be confident of its position as a stand-alone company.

"AG Barr continues to outperform the UK soft drinks market and will follow its successful long-term strategy supported by a strong balance sheet, unique brands and a well invested asset base."

Chief executive of AG Barr Roger White has consistently stated that the Britvic deal was a good opportunity but the core business, which also produces Tizer and Rubicon, was strong enough to continue on its own.

The breakdown of the deal brings to an end a long-running saga which kicked off in November last year when the two companies announced a £1.4 billion merger.

The deal quickly became seen as a reverse takeover by AG Barr of its larger rival – which was struggling with a costly recall of its Fruit Shoot drinks and generally subdued trading – with chief Mr White lined up to run the whole business.

Shareholder approval was gained from both sides and the deal was expected to complete in February this year.

However the OFT scuppered that plan when it referred the transaction amid fears it would lessen competition in the soft drinks market and lead to higher prices for consumers.

Britvic's performance has since recovered while its new chief executive Simon Litherland has laid out a new £30 million cost saving and international expansion strategy .

Although the CC gave provisional clearance last month its full guidance was only published this week which paved the way for negotiations to re-start.

Britvic's chairman Gerald Corbett reiterated his stance the company was much improved from when AG Barr had first approached it.

He said "The execution and delivery of this [new strategy] is now the absolute priority of the Britvic team.

"We wish Barr and its management team well.

"They are good people with a fine business."

Shares in AG Barr closed the day up 0.5p, or 0.1% to 522p while Britvic slipped 10p, or 2%, to 512p.