Share Search
Visit the Share Search
You are here:
Canaccord Genuity has upgraded its rating for AG Barr but downgraded its view on Britvic following the Competition Commission's (CC) provisional approval of the soft-drink companies' merger on Tuesday.The competition watchdog said that the the combined company would not be detrimental to competition and would not cause a big hike in wholesale prices. Meanwhile, the firms' brands are not seen as close competitors.On the face of it, the news should have removed some uncertainty about the proposed tie-up; however, comments from Britvic have raised some concerns that the groups may have to renegotiate on terms once the CC gives its final verdict on July 30th.Britvic's Chairman Gerald Corbett warned that Britvic is in a "different place" to last summer when the company first agreed to a merger. Corbett said: "The cost savings from merging are less, we are performing better, we have new management and we have a new strategy to deliver good growth internationally as well as in the UK."Canaccord analyst Wayne Brown said that comments from Corbett are "perplexing": "We were always of the view that the merger was much more than just cost savings; strengthening the balance sheet, improving the depth and breadth of management across many levels, increasing the balance of revenues towards owned brands and a major infrastructure rationalisation project. Lastly, cost savings were conservatively set in the initial proposals."Brown added that while Britvic's remarks about the company performing better are "questionable" given a weaker performance in the second quarter.Canaccord has cut its rating for Britvic to 'sell', saying that its valuation - trading at 17.5 times earnings - is "full" if this merger doesn't occur. However, the target price has been lifted from 380p to 420p.As for AG Barr, the broker said it see upside to current prices due to its ability to generate strong returns. Its rating has been lifted to 'buy' and the 570p target price has been maintained.