C&C boosts its shares with £45m deal for assets of top winemaker

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The Bulmers Factory in Clonmel. The deal with Constellation Brands will treble C&C's output of cider in the UK, all of which is sold under the Magners brand.

Pat Boyle

December 01 2009 04:44 AM

Drinks group C&C has bought the UK cider assets of Constellation Brands for £45m (€49m) in a deal that also includes a cider production facility based in Somerset and a distribution warehouse in Bristol.

C&C shares jumped almost 9pc or 22 cent to €2.80 on news of the acquisition.

The deal will almost treble C&C's output of cider in the UK, all of which is currently sold under the Magners brand.

Based in New York, Constellation Brands is one of the leading producers of premium wines in the world. The business being bought by C&C trades as the Gaymer Cider Company, an established manufacturer and supplier of cider with a broad portfolio of cider brands, including Blackthorn, Olde English and Gaymers.

It also includes a range of value cider brands and own-label cider production for UK grocers.

In the year to February 2009, Gaymer was responsible for the production of about 1.5 million hectolitres of cider -- almost twice the size of Magners' current UK volumes.

In the same year, the Gaymer business generated sales of £64m and profits of about £5.4m and C&C said it was expected to deliver strong profit growth in the current year.

Financed

The transaction will be financed by a new bank facility of £60m (€67m).

"The transaction diversifies C&C's portfolio within the overall cider category, strengthens the group's packaged cider offering and provides C&C with an established mainstream draught cider brand," it said.

It also increases C&C's presence in the important off-trade category -- the UK is the largest cider market in the world by value.

At home, meanwhile, the cider industry is looking for a 20pc cut in excise duty.

Speaking yesterday, the chairman of the Irish Cider Association, Aidan Murphy, called on the Government to "urgently address the very high excise regime applying to cider in order to protect jobs in the export and manufacturing sector and ensure the policy of balanced regional development is maintained".

Mr Murphy was speaking as the latest data from the Revenue Commissioners revealed that cider sales in the year to date had fallen by 5.5pc in comparison to the same period in 2008.

Mr Murphy said the growth in popularity of cider was a major domestic success story given that 86pc of cider consumed in Ireland was manufactured here -- higher than any other alcohol category.

"However, the economic downturn and a major increase in cross-border shopping have impacted heavily on the entire drinks industry with decreased sales across the board," he said.