Soft drinks maker AG Barr (LON: BAG) is acquiring Boost Drinks for an initial £20m with up to £12m more payable depending on performance over two years. This will be funded from the Irn-Bru company’s cash pile and will be earnings enhancing in the first full year.
The Boost brand was founded in 2001 and is in the functional drinks category, which includes energy and sports drinks. It has a strong position in independent retailers and AG Barr will help it to broaden is distribution.
Production and warehousing is outsourced. Boost will continue to be managed by the founder as a separate business. In 2021, Boost Drinks generated revenues of £42.1m and pre-tax profit of £1.9m.
In the year to January 2023, AG Barrr is expected to make a pre-tax profit of £43m on revenues of £306m. A full contribution from Boost Drinks in 2023-24 will add 3% to earnings per share.
The AG Barr share price is 6.5% higher at 538p. That means the shares are trading on 16 times prospective 2023-24 earnings.
