A PLANNED merger between soft drinks firms AG Barr and Britvic collapsed after the English firm rejected a new proposal from the makers of Irn-Bru.

Barr, which dates back to 1875, revealed it made a new proposal following formal notification earlier this week that its lapsed £1.4billion merger with Britvic had been given the all clear.

The firm, based in Cumbernauld, near Glasgow, said Britvic turned down the latest offer even though it was on "more favourable terms".

Britvic claimed the new proposal from Barr, which would have seen the enlarged group made up of 65% Britvic and 35% Barr, was rejected as it represented only a "small improvement" on the previous offer.

Ronnie Hanna, AG Barr chairman, said: "While we are disappointed that the opportunity to create significant value for both sets of shareholders has been rejected, the board of AG Barr has every reason to be confident of its position as a stand-alone company."

Hertfordshire-based Britvic had raised doubts over a deal after hinting on Tuesday that it was under no pressure to resurrect the merger plan, in spite of the long-awaited competition clearance being secured.

Britvic shares dropped 2%, while Barr rose more than 1% after yesterday's announcement.

It marks the end of a long-running saga after a deal lapsed in February after the Office of Fair Trading decided to refer the matter to the Competition Commission.

In its final report, the commission said the brands owned by Britvic and AG Barr were not close competitors and consumers would not lose out.

Chairman Gerald Corbett said: "We wish Barr and its management team well. They are good people with a fine business."