Irish beer and cider maker C&C (CCR) froths up 10.5% to €2.84 on news it is in ‘advanced discussions’ to buy Matthew Clark and Bibendum from collapsed drinks distributor Conviviality (CVR:AIM) for ‘a nominal sum’.

While that is positive for employees, customers and suppliers of the affected businesses, C&C’s swoop will be scant consolation for Conviviality shareholders whose holdings have been wiped out.

Conviviality shocked AIM market watchers last week by announcing its intention to go into administration and ‘explore a potential sale of all or part of the business’, having failed to raise the £125m required to remain solvent following profit warnings and the discovery of a £30m tax bill.

The Bargain Booze-to-Wine Rack operator, whose CEO Diana Hunter has fallen on her sword, also stated shareholders would receive ‘little-to-nil value’ in the wake of its disastrous implosion.

C&C SWOOPS

However, with the backing of AB InBev, Bulmers, Magners and Tennent’s distributor C&C will rescue ‘Matthew Clark Bibendum’, in a package including their Catalyst, Peppermint, Elastic and Walker & Wodehouse subsidiaries.

The deal is set to be confirmed later today on the appointment of administrators to the Conviviality Brands business.

cider

C&C, which also makes US craft cider brand Woodchuck, will provide funds to support the ongoing working capital needs of Matthew Clark Bibendum, the UK’s biggest independent drinks distributor to the on-trade (bars, pubs, hotels, restaurants) with Stella Artois-to-Corona maker AB Inbev lending its considerable financial backing to the deal.

Matthew Clark Bibendum will be run as a separate business and C&C says the deal will ‘create the leading independent route-to-market network across the British Isles, alongside C&C’s existing drinks wholesaling businesses in the UK and Ireland’.

CEO Stephen Glancey says ‘we know the Matthew Clark and Bibendum businesses very well. They are great businesses with unparalleled on-trade market access, a wide range of supplier relationships and supported by a knowledgeable and loyal employee base.’

PATCHY TRACK RECORD

AJ Bell investment director Russ Mould comments: ‘It’s an interesting move for C&C but perhaps not surprising given it has been trying to broaden its focus.

‘Last year’s purchase of a 47% stake in Admiral Taverns gave C&C a foothold in the pubs sector in an effort to improve distribution of its products. The Conviviality deal would further strengthen its position in the distribution market.

‘However, it is worth noting that C&C has a patchy track record when it comes to making deals and generating value for its shareholders.

‘For example, the purchase of US rival Vermont Hard Cider in 2012 for $305m caused a major hangover for C&C in the following years. Last year it reduced the carrying value of the Vermont business to a mere €45m ($55m).’

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Issue Date: 04 Apr 2018