AG Barr PLC (LSE:BAG) the owner of Irn Bru, is underpinning its current strategic plan with the purchase of Rio, paving the way for a higher growth phase over the medium to long term, analysts reckon.
Having purchased Rio Tropical Limited for £12.3 million, the Scottish beverage manufacturer will add the drink brand to a portfolio which includes juice drink firm Rubicon, MOMA, the oat milk producer, and Funkin, the cocktail maker.
Expected to help rebuild margins so it can achieve targets for the medium to long term, the acquisition also makes sense as Rio has been marketed, sold, and distributed through Boost since 2021 – an AG Barr brand since it acquired it at the end of 2022.
Since Boost’s acquisition, the London-listed group would have already developed an understanding of the brand, experts at the London-based broker believe.
Analysts at Shore Capital Group (LSE:SGR) reckon the experience could help the company with innovations to the product and how it is distributed, while also reaping the benefits of not having to pay any license fees.
Although full-year estimates remain unchanged following the deal, the investment group welcomes the bolt-on acquisition and is impressed by the group’s attractive multiples, high-quality branded business and very robust balance sheet.
Shares in AG Barr lifted a little over 1% on Tuesday, having opened trading at around 505p.