Potential Financial Risks

1. Initial Cost: The acquisition has an initial cost of £16.5m, which poses financial risk as this amount can be lost if the takeover does not succeed.

2. Opportunity Cost: The £21m spent on this acquisition might be better allocated to other ventures such as developing new soft drink products, which could yield higher returns.

3. Market Entry Risk: Entering into the cocktail mixer market carries an inherent risk and uncertainty, especially for AG Barr if they lack experience in this particular segment, which may negatively impact profitability.

Potential Financial Rewards

1. Diversification: The takeover allows AG Barr to diversify into new markets. This reduces reliance on the traditional soft drinks market and introduces additional revenue streams.

2. New Market Segment: The growing cocktail mixer market represents a lucrative opportunity. AG Barr can leverage its existing sales infrastructure and reputation to capture market share effectively, increasing sales and profits.

3. Economies of Scale: AG Barr can utilize its distribution network for Funkin’s products, potentially leading to reduced unit costs and higher overall profitability.

Conclusion

In conclusion, while the financial rewards could be substantial, the risks are significant. Success hinges on AG Barr's ability to navigate the new market effectively and to absorb potential losses associated with the £21m investment.