ANALYSTS expect AG Barr to launch a new bid for Britvic before the end of this month after the Competition Commission gave its full clearance for a deal to proceed.
The Takeover Panel has now set AG Barr a deadline of July 30 to either submit an offer for its larger rival or walk away.
While the Cumbernauld company signalled it was hopeful a deal could be struck, Britvic – which makes Robinsons J20, Tango and Fruit Shoots – indicated it believes the prospects for the business on its own are "bright".
Industry sources suggested any new proposal would have to be "hugely compelling" for Britvic to accept.
One sticking point could be AG Barr's insistence the larger company is run by its chief executive Roger White, particularly as Britvic chairman Gerald Corbett hailed the positive impact its new chief executive Simon Litherland had made.
Mr Corbett said the prospect of £30 million of cost savings over the next three years through a strategic review meant the merger benefits are "materially less than they were".
He said: "We would obviously consider any proposal tabled in the interests of shareholders.
"However, Britvic is in a very different position to last summer when the merger was agreed."
AG Barr said: "The board will review all material new developments since the original merger terms were agreed but currently believes that, other than Britvic's recently announced short-term cost saving plan, little has changed to alter its previous conviction that a merger represents a unique opportunity for value creation for both sets of shareholders in the short, medium and long term."
The original £1.4 billion proposal, which was close to completion in February when the Office of Fair Trading referred it to the CC, would have resulted in AG Barr shareholders getting around 37% of the shares in the enlarged company.
Analysts believe AG Barr – the maker of Irn-Bru, Tizer and Rubicon – may offer to give up slightly more of a stake in any new bid proposal.
Damian McNeela, from Panmure Gordon, said: "We would agree that Britvic is in better shape to the extent that it is not dealing with a major product recall that almost resulted in breaching covenants.
"However, we believe, along with Barr's management, that there continues to be compelling strategic rationale for the merger to go ahead.
"This is based on potential cost synergies, improved position within the UK market place, scope for international expansion and an improved balance sheet."
Wayne Brown, from Canaccord Genuity, said a deal still makes sense for both parties due to long-term pressures on commodity prices and constrained UK growth prospects. He also suggested Britvic's underlying performance has actually worsened in recent months and questioned whether it could deliver on its latest strategy.
He said: "Considering past track record for the group and a failed [merger and acquisition] strategy, we see a fundamental difference in laying out a strategy and actually delivering one. The ability to deliver on this strategy when a significant cultural change is required, is challenging.
"This is even more the case where up to 15% of the workforce will be shed and a major restructuring of the operational framework will take place."
The CC's full findings, published yesterday, came after it gave preliminary clearance last month.
AG Barr's shares closed down 9p, or 1.7%, at 522.5p while Britvic was up 5.5p, or 1%, at 526p.
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