Tuesday 16 July 2019

C&C got UK distributor for less than half its intrinsic value: Davy

Bottle: C&C ploughed tens of millions of euro into MCB to stabilise the business
Bottle: C&C ploughed tens of millions of euro into MCB to stabilise the business
John Mulligan

John Mulligan

BULMERS maker C&C acquired the Matthew Clark and Bibendum distribution business in the UK last year for just over half its implied €330m intrinsic value, according to Davy Stockbrokers.

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

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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, €35m tax bill owed by Matthew Clark and Bibendum to the UK Exchequer.

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

"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. 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 in the 12 months to the end of February. Revenue almost tripled to €1.57bn, which included just over €1bn from MCB.

Irish Independent

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