Prospect of Barr deal fades
English firm’s 50% rise in pre-tax profit reduces benefits from a takeover Standard Life to pay rebate tax on behalf of clients
ANY attempt by Irn-Bru owner AG Barr to rekindle its planned reverse takeover of rival Britvic will be on much less favourable terms, if it happens at all, the England-based company has signalled.
The Competition Commission is expected to decide this summer whether Britvic, whose brands include Robinsons, Tango and Fruit Shoot, can combine with Cumbernauld-based AG Barr to create one of Europe’s biggest drinks firms.
But some analysts put the chances of a deal now at less than 10%.
Gerald Corbett, chairman of Hemel Hempstead-based Britvic, said: “The Competition Commission is expected to announce its final decision by the end of July.
“The board will then decide, in light of the Competition Commission’s decision, whether a transaction on the right terms with appropriate management and governance arrangements, can be consummated in the interests of shareholders.
“In the meantime, as we approach our busiest time of year, the management team, under our new chief executive, is totally focused on executing its new strategy.”
Britvic’s new chief executive Simon Litherland, who took the helm in February, yesterday unveiled plans to make £30 million of annual cost savings by 2016, including more than 300 job losses.
Britvic also posted a 51.2% rise in pre-tax profit to £37.5m for the 28 weeks to April 14.
The plans make the £40m of savings promised through the combination with AG Barr less attractive, although analysts think these could still amount to £20m.
Britvic’s shares closed up 50.3p or 10.7% at 522.5p.
They have more than doubled since July last year when the STANDARD Life has surprised rivals in the fund industry by promising to pay an income tax liability due from investors directly to HM Revenue & Customs on their behalf.
The regulator is clamping down on the “cashbacks” investors receive from online investment platforms by way of a discount, to ensure transparency of charging. Ahead of a ban on such rebates from 2014, HMRC last month unexpectedly made the cashbacks subject to income tax.
Standard Life said earlier this week it had “agreed with HMRC to pay the fund rebate income tax liability until the end of December 2013 direct to the Revenue on behalf of all Standard Life Wrap and FundZone customers”. They would now have no liability to declare on their tax return.
Some platforms such as Alliance Trust Savings already offer entirely rebatefree funds and Standard said it was “working to remove the rebate mechanism from its pricing structure by the end of 2013”.
David Tiller, head of platforms, said the group felt “a responsibility to do what we could to give advisers and their clients the time to plan for this liability in the future”.
But according to other leading providers questioned by Money Marketing magazine, Standard’s initiative will not be copied by rivals.
Edinburgh-based Nucleus along with Skandia, Ascentric, Cofunds, Aviva, Transact, Axa Elevate and Novia all have no plans to intervene in customers’ tax.
Holly Mackay, at industry monitor The Platforum, said whatever had prompted the move, it “looks spookily like a life company acting in a commercially savvy way for a consumer benefit”.