Britvic has revealed its aborted merger with the Scottish drinks company behind Irn-Bru cost it almost £10 million in fees.
The Hertfordshire-based firm incurred exceptional costs totalling £9.6m in the year to September 29 as a result of advisory fees racked up during talks over a proposed mega merger with Cumbernauld-based AG Barr.
The £1.4 billion coming together of the two companies, which would have created Europe’s largest soft drinks firm, had been approved by both sets of shareholders before it was effectively scuppered by an intervention from the Office of Fair Trading.
The deal was remitted to the Competition Commission for investigation, but by the time clearance was given the proposed tie-up between the two companies had all but fallen apart as Britvic’s trading performance improved.
Barr, which also owns the Forfar-based Strathmore water concern, made a last-ditch attempt to resurrect the merger but it could not be saved.
Britvic’s results showed few signs of a hangover from the collapse of the merger.
The Robinsons squash maker saw annual profits race 28% ahead thanks to the summer heatwave and the partial recovery of Fruit Shoot sales following a damaging product recall last year.
The firm said an exceptionally hot July had boosted sales of its drinks in the take-home market and in pubs and clubs, with pre-tax profits climbing 26.7% to £108.1m.
Total group revenues increased by 4.4% to £1.32bn, during the year while the adjusted earnings per share figure was 27.5% ahead at 35.2p.
British sales volumes of its still drinks dipped 1% but revenues by value lifted 5.7%, while fizzy drink sales held firm by volume and rose 3.6% by value.
Britvic also confirmed its performance in the current financial year was slightly ahead of the previous period despite strong comparisons.
It said it expected to grow underlying earnings by as much as 16% over the year ahead, pencilling in a rise from £135m to between £148m and £156m.
Some of that increase is expected to be delivered by the expansion of Fruit Shoot in America after the company agreed a 15-year deal with PepsiCo, which will see the brand rolled out to 41 states next year, up from 32.
Britvic is slashing £30 million in annual costs over three years, leading to the closure of factories in Chelmsford in Essex and in Huddersfield, as well as a raft of job cuts.
The efficiency programme was announced following the collapse of the Barr deal.
Chief executive Simon Litherand said Britvic had delivered a strong performance in a year of significant change for the business.
He said: “We have grown revenue and price in all of our business units and gained market value share, resulting in operating profit growth in excess of 18%.
“We have also reduced debt by nearly 10%, on the back of improved free cash flow generation. We have made good progress on the strategic initiatives that we communicated back in May, and remain on-track to deliver £30m per annum of cost savings from 2016.”