Saturday 1 October 2016

Pabst gets option to buy C&C US assets following distribution deal

Paul O'Donoghue

Published 12/12/2015 | 02:30

Pabst Blue Ribbon
Pabst Blue Ribbon

Irish drinks company C&C has inked a distribution deal with Pabst Brewing Company (PBC) that gives the US multinational the option to buy C&C's US assets.

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The Dublin-based firm said PBC also acquired a long term option to acquire C&C's US assets as part of the deal.

The company said "consideration will be determined at the time of any exercise of the option, however, it will at least be consistent with the current carrying value of the assets."

C&C declined to give more detail when asked.

The deal will allow Pabst to distribute C&C's cider products throughout the US.

C&C, known in Ireland for its Bulmer's brand, entered the US market three years ago with the purchase of Vermont Hard Cider Company for €235m.

It has struggled with distribution challenges and strong competition from rival brewers.

C&C wrote down the value of its North American business by €150m in May.

At the time of the acquisition in 2012 Vermont generated earnings before interest and tax (EBIT) of about €10m.

In the first half of the company's 2016 financial year it had EBIT of €500,000. Management at C&C has repeatedly said the firm is committed to the US.

C&C has come under pressure to dispose of its American assets from Orange Capital, a US investor that recently took a 5pc stake in the Irish firm. In October Orange went public with a series of demands it sent to management at the drinks company, one of which was that C&C offload its US business.

Orange said it believes a sale price of €150m-€200m is achievable.

Several analysts, including Davy Stockbrokers, have estimated that C&C's US arm is currently worth about €150m. C&C valued the assets at €143.5m at the end of February.

Under the deal announced yesterday, Pabst, the maker of Pabst Blue Ribbon and the largest privately-held brewer in the US, will have the exclusive licence to distribute, market and sell all of C&C's cider brands in the US including Magners (Bulmers in Ireland).

Analysts reacted positively to the agreement, saying it will expand the reach of C&C's brands in the region and should result in an increase in earnings.

Irish Independent

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