SOFT DRINKS group Britvic said it was in talks with Irn-Bru maker AG Barr about a £1.3 billion merger, a move that could see it attract interest from private equity or rivals such as PepsiCo.

Britvic owns the Ballygowan brand and sells PepsiCo brands in Britain and Ireland. Ballygowan is one of a number of Irish brands, including Club, which is owned by Britvic Ireland. It acquired the portfolio of soft drinks from Irish drinks producer CC in 2007 for €249.2 million.

On Tuesday it confirmed that it had withdrawn two batches of its Ballygowan products from sale across the island of Ireland. The Food Safety Authority of Ireland and the British Food Standards Agency said that due to an “off odour” in a small number of drinks, batches of two products were withdrawn from sale.

In July it had to recall of one of its top brands, Robinsons Fruit Shoot, over faulty caps, a move that could cut up to £25 million (€31.5 million) from pretax profit in coming years.

The proposed all-share merger, the subject of recent reports, followed an approach by the smaller AG Barr that would see its shareholders own 37 per cent of the enlarged group with investors in Tango and J20-maker Britvic owning the rest.

That split was in line with the relative market values of the two companies at Tuesday’s closing prices.

The companies said the proposed merger would have “compelling industrial logic” and create significant synergies. These will likely to centre on management cost savings, greater buying power and enhanced revenues from better market access. - Reuters