By Scott Wright
IRN-Bru owner AG Barr has made a big move into the sports and energy drinks market after securing one of its most expensive acquisitions to date.
The Cumbernauld-based company has acquired Boost Drinks Holdings in a deal worth up to £32 million. The value of the deal eclipses the price paid by AG Barr six years ago for Funkin, the fruit puree, cocktail mixers and syrups brand, which it bought for an initial £16m, rising to £21m, but is less than the £60m that it invested to acquire Groupe Rubicon, the exotic fruit juice company, in 2008.
Barr has paid an initial £20m to acquire Boost from founder Simon Gray and wife Alison. A further consideration of up to £12m could be payable, depending on the future revenue and profitability performance of Boost over a two-year period following completion of the deal.
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Barr swooped for Boost around two years after its long-standing to deal to distribute Rockstar, the US energy drinks brand, was terminated. Since then, it has been developing its own range of energy drinks, including Rubicon RAW Energy and Irn-Bru Energy, with the Boost acquisition set to boost is portfolio of functional beverages further still.
Barr, which is funding the deal from cash reserves, noted that the Boost brand operates in the high-growth functional beverage category, spanning energy, sport, and protein, and has a strong market position in the independent retail channel, notably in England and Northern Ireland. It highlighted the potential to develop the Boost portfolio and to enhance its scale and capability by exploring innovation, new product development, and routes to market, as well as its operational infrastructure.
Mr Gray will continue to lead Boost, which has 35 employees, as a standalone business unit within AG Barr. The Scottish firm said Boost has an asset light business model that outsources its production, warehousing and logistics. Boost also has an exclusive sales and distribution agreement with Rio, the fruit drinks brand.
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Roger White, chief executive of AG Barr, said yesterday: “Today’s announcement is further evidence of our strategy to continue to grow the business through targeted acquisitions, with a particular focus on developing within high growth and functional categories.
“Boost is one of the UK’s most recognisable functional drinks brands, and we are delighted to welcome the team into the AG Barr Group. The Boost portfolio offers premium taste and performance at a competitive price, with a strong market position in the UK independent retail channel.
“With AG Barr’s proven track record of acquiring and developing attractive brands such as Rubicon and Funkin, I look forward to working with Simon and the team to ensure Boost continues to grow and develop under our ownership.”
Mr Gray, who founded the business in 2001, said: “I’m hugely excited to embark on the next phase of Boost’s growth with AG Barr. Over the past 20 years Boost has proven its popularity with consumers who want great tasting, high performing functional drinks that offer great value for money and I am sure that as part of the AG Barr Group we will maintain our strong growth trajectory.”
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The Boost deal marks Barr’s foray into the mergers and acquisitions arena since it bought an initial 60 per cent stake in MOMA, a producer of plant-based milk, in December last year.
Shares in AG Barr closed up 19.75p, or 3.9%, at 524.75p.
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