British drinks company Britvic has agreed the terms of an around #1.4 billion (€1.7 billion) all-share merger with AG Barr, creating one of the largest soft drinks companies in Europe.

The deal will see shareholders in Tizer manufacturer AG Barr owning 37 per cent of the enlarged group, while investors in Tango and J20 maker Britvic will own the rest, a split in line with the relative market values of the two firms.

The companies predicted that the merger, which both sides said has "compelling industrial logic", will amount to #40 million in cost savings and extra revenue each year.

The new company will be called "Barr Britvic Soft Drinks plc", and will be run by AG Barr's current Chief Executive Roger White, with Britvic's finance director John Gibney as CFO.

It will sell products ranging from Robinsons squash to Irn-Bru, the fizzy orange soda dubbed "Scotland's other national drink," and will have combined sales of around #1.5 billion a year.

Britvic has an existing relationship with global industry leader PepsiCo, with which it has exclusive bottling and distribution rights in Britain.

Britvic said it had agreed "variations" to the contractual terms of its agreement with Pepsi should the merger go ahead, though it declined to comment on what these were.

The merger is conditional on the approval of shareholders from both companies as well as clearance from competition regulators.

Reuters