IT still makes "commercial and strategic sense" for soft drinks company Britvic to merge with Irn-Bru maker AG Barr, according to a leading analyst, despite the Hertfordshire company's move to distance itself from a deal.

Britvic this week set out a £30 million cost-cutting plan under new chief executive Simon Litherland and said it would only consider a tie-up on the "right terms".

Britvic, whose brands include Robinsons, Tango and Fruit Shoot, agreed to a reverse takeover by Cumbernauld-based AG Barr in November and the installation of the Scottish com-pany's chief executive Roger White as chief executive.

The deal lapsed in February after the Competition Commission launched an inquiry.

Cannacord Genuity analyst Wayne Brown wrote in a note to clients: "We remain of the view the proposed merger with AG Barr makes commercial and strategic sense."

He said plans to cut 15% of Britvic's workforce are being overseen by a team with "an unproven track record on delivering on large projects".

A merger with much smaller rival AG Barr would "bring with it a management team with a proven track record of delivering on large projects," he added.

But analysts at Nomura, Britvic's joint house broker, estimate the chances of a deal at less than 10% and some at Britvic are understood to believe Mr White has insufficient inter-national experience to lead the combined company.

Britvic's shares plunged last summer after it recalled its Fruit Shoot product.

They have since doubled in value, although the stock gave up some of the gains yesterday, closing down 14p at 508.5p. AG Barr shares closed down 18p at 570.5p.