Britvic, the company behind Robinsons and Tango, has announced it is in merger talks AG Barr, the maker of Irn-Bru and Tizer, which if successful would create one of Europe’s leading soft drinks companies with a combined value of c£1.4bn. The proposed deal would see Britvic’s shareholders owning a 63% stake in the merged group, with AG Barr’s shareholders taking the remaining stake. Roger White, AG Barr's chief executive, would become chief executive of the combined group with John Gibney, Britvic finance director, becoming finance director. Gerald Corbett, Britvic's chairman, would become chairman of the enlarged company. In addition, the new board would comprise six other non-executive directors – three nominated from each of Britvic and AG Barr. The group’s said that discussions were at an early stage but that an agreement had been reached with respect to certain key aspects of the merger. A Britvic statement said: “A merger would create one of the leading soft drinks companies in Europe, with a strong portfolio of market leading brands. “The combination would have compelling industrial logic and represents an opportunity for both companies to enhance their industry position, and achieve significant synergies and shareholder value. "Discussions are at an early stage and, whilst there can be no certainty at this stage that such discussions will conclude successfully, agreement has been reached with respect to certain key aspects of the merger.” Analyst reaction Wayne Brown, analyst at Canaccord Genuity, said: “Whilst the RNS states that discussions are at a preliminary stage, it appears that discussions are actually well advanced. We would also assume (not confirmed by either party) that with PepsiCo’s change of control clause within its bottling contract with Britvic, that they have agreed to the proposals laid out today. This would remove the largest risk the merger. “It has been agreed that Britvic shareholders would own 63% and AG Barr own 37% of the enlarged group’s share capital. This suggests that the proposal represents a 7% premium to last night’s BVIC’s closing price and suggests a fair value of 350p per Britvic share. Hence we have moved to Hold from Sell and increased our target price to 350p. “We are of the view that this is the best result for the Britvic shareholders as the senior management team as well as Board of directors would be significantly improved with the introduction of Roger White (CEO of AG Barr) who would be CEO of the combined group and Ronnie Hannah would become Deputy Chairman. In our view the AG Barr management team have a very strong track record and would add significant strength to Britvic from both an operational and financial performance perspective. “On the basis that this proposed merger puts Britvic firmly in play we move to a Hold and increase our target price in-line with the terms announced today.”