C&C puts off flotation as markets remain volatile

THE fizz was taken out of Cantrell & Cochrane yesterday after the drinks group pulled its stock market flotation.

The company said the current volatile markets meant it was unwise to go public and it would wait for a more opportune time with stable market conditions to float.

The shelving of the initial public offering was another blow to the Irish Stock Exchange, as C&C would have been the first new issue since Paddy Power floated in December 2000.

In May, technology firm Spectel scrapped its IPO at the last minute.

However, C&C would have been a more defensive stock for investors to buy into.

Focused on consumer markets, with brands such as Bulmers Cider, Club Orange, Ballygowan and Tayto in its portfolio, it could have expected to attract investors’ cash.

After the markets tumbled last week, the company insisted the flotation was on track, but it took the decision over the weekend that given the market volatility, now was not the right time to launch an IPO.

C&C chief executive, Maurice Pratt said: “The volatility that is out there now is unprecedented and it is transferring across sectors and categories in a way it has not before. With that volatility and likelihood of further uncertainty there was no guarantee that we could have had a good after market for the stock. We are very conscious about what happened in the retail market here and there is no way we could have gone ahead.

“We will review the decision when equity market circumstances change. We still think as management the best thing is an IPO but we need the right timing and circumstances,” Mr Pratt said.

For the past month C&C has been touring institutional investors to drum up support for the 1.1bn euro IPO, the biggest since Eircom floated in June 1999. Mr Pratt said that institutions here and abroad had received the company positively.

The company has also targeted small shareholders with a massive advertising and marketing campaign.

It had set a price range of 2.60 euro to 3.60 euro per share, but with markets plunging over the past two weeks, it was expected to go off at the lower end of that scale. Weekend reports even suggested that it could be priced at just 2.10 per share.

Members of the public who applied for shares will receive a refund soon. It is not known how many people applied for shares as the deadline was yesterday.

A research document by Deutsche Bank last week said shares in C&C would be good value as it is “an outstanding company at an extremely attractive price”.

C&C would have raised around 560m euro from the IPO with around €250m of this going to pay off some of the company’s 700m euro debt pile.

The postponement will be a blow for the company’s 2,000 workers, who were to have been given 20m euro in shares.

Management have also lost out on what could have been a 140m euro windfall for them. C&C has not been alone in deciding to wait for better conditions.

Last week, Focus Wickes, one of the largest DIY chains in Britain, and Yell, which runs Britain’s telephone directory services also cancelled their IPOs. And Italian fashion house Prada cancelled its listing for a third time.