Belfast Telegraph

C&C snapped up UK group for half of its actual value, says report

By Staff Reporter

Magners maker C&C acquired the Matthew Clark and Bibendum distribution business in the UK last year for just over half its implied £295m intrinsic value, according to Davy Stockbrokers.

The Irish drinks group, which also owns Tennent's NI, bought the then troubled business in a pre-pack administration from Conviviality, with support from AB InBev, the world's largest brewer.

C&C paid only a nominal sum for Matthew Clark and Bibendum.

However, it injected a substantial amount of working capital into the business and also shouldered debt and an outstanding £30m tax bill owed by Matthew Clark and Bibendum to HMRC.

Still, Davy Stockbrokers reckons that actual gross consideration of the acquisition for C&C was €178m (£159m).

"The acquisition of Matthew Clark Bibendum (MCB) materially enhances C&C's position across the UK drinks supply chain," noted Davy in a report.

It added: "The MCB acquisition marks an important step in the strategic evolution of the group and one that solidifies C&C's branded wholesale model.

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"Fundamentally, MCB enhances the defensibility of C&C's business model and delivers both tangible and intangible synergistic benefits to the broader group and its stakeholders."

C&C made an operating profit of €104.5m (£93.5m) in the 12 months to the end of February.

Revenue almost tripled to €1.57bn (£1.4bn) which included just over €1bn from MCB.

Earlier this year, the company said it expects premium products to account for an increasing amount of its sales, with demographic trends pushing alcohol consumption down.

Chief executive Stephen Glancey said: "There aren't many mature markets where alcohol consumption is growing... people are drinking less but they're drinking better, they're going to premium.

"Equally they're going to local, artisan and craft... that's the market and you've got to play in it."

He said the "craft super-premium" portfolio is currently 7% of the company's net sales value, and that he wants to get that figure up to 10%.

In its most recent results for the year to February 2018, Tennent's NI reported turnover of £55.3m, down from £55.5m. Pre-tax profits were also down from £7m to £6.2m.

The company employs just over 100 people. Tennent's said it faced challenges including strong competition and changing consumer tastes.

Belfast Telegraph