Pepsi backs Britvic-Barr deal to create European beverage leader

PepsiCo Inc the second-largest soft-drink maker in the world, is supporting a merger of Britvic Plc and AG Barr Plc, which would create one of Europe's leading beverage companies with sales of 1.5 billion pounds.

In its support for the transaction, PepsiCo would not exercise its right to end agreements for Britvic to distribute a number of its main brands in the UK in the event of a change of control, according to the joint statement of the UK companies.

The companies have agreed to certain variations to the terms of the contract of their agreements, which would allow Britvic to sell brands including Pepsi, 7UP and Gatorade in the UK and Ireland until 2023, according to today's statement.

The all-share deal would see Britvic shareholders receive 0.816 nee AG Barr shares for each share held and they would own 63 per cent of the enlarged company. Cumbernauld, Scotland-based AG Barr makes brands, including Irn Bru and Tizer.

The combined entity would be led by AG Barr CEO Roger White, while Britvic's John Gibney would be chief financial officer.

The companies aim to counter slow consumer spending in the UK, their largest market, through the move. They would also have ''significant presence in France and Ireland, with growing distribution of proprietary brands in markets such as the US,'' according to the statement.