C&C Group PLC (LON:CCR) has lodged a bid to acquire Matthew Clark (Holdings) Ltd and Bibendum PLB (Topco) Ltd, together Matthew Clark Bibendum, the distribution arm of ailing drinks firm Conviviality PLC (LON:CVR).
The Magners cider maker said it is in advanced discussions to acquire the distribution business, though the acquisition is contingent on the appointment of administrators to Conviviality which is expected to take place on Wednesday.
READ: Bargain Booze owner Conviviality to file for administration after failed cash call
C&C said its proposal is supported by Belgian drinks giant AB InBev NV, which will provide additional financial support for the acquisition.
The Ireland-based company said at completion, Matthew Clark Bibendum will have £102mln of working capital facilities provided by its current lender group, repayable in instalments over the following 12 months.
Conviviality, owner of the Bargain Booze chain, unveiled plans to file for administration on 29 March 2018 after failing to raise emergency funds following an unexpected £30mln tax bill that saw its chief executive Diana Hunter resign and the suspension of its shares.
Russ Mould, investment director at AJ Bell, commented: “Irish cider maker C&C has thrown its hat into the ring as a potential saviour for Conviviality’s distribution business, Matthew Clark Bibendum.
"The announcement implies it is a done deal, potentially completing later today. It’s an interesting move for C&C but perhaps not surprising given it has been trying to broaden its focus."
He added: “However, it is worth noting that C&C, which is best known for making Magners and Bulmers ciders and Tennent’s lager, 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 US$305mln 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 €45mln (US$55mln).
“Shares in the business have fallen by 45% over the past five years compared to a 15% gain in the broader UK stock market, as represented by the FTSE All-Share index.”
Shares in C&C Group were up 7.7% at 2.7p in mid-morning trading Wednesday.