C&C set for €205m acquisition

IRISH drinks group C&C is to buy the Irish, Northern Irish and Scottish divisions of Anheuser Busch-InBev for £180 million (nearly €205m), in a move that should significantly boost group revenue.

The acquisition will give C&C outright ownership of the Scottish lager brand, Tennent’s, and the Wellpark brewery in Glasgow, as well as distribution rights for a number of brands across the three markets such as Stella Artois, Hoegaarden, Beck’s and Leffe, plus distribution rights to Budweiser in Scotland and the North.

The deal requires shareholder approval before being completed. An extraordinary general meeting is likely to be held in either late September or early October, with the formal completion expected in mid-October.

The group’s share price jumped by nearly 16% yesterday to €2.58 on the back of the announcement.

C&C said yesterday that the acquisition would be beneficial on many levels and evolves its strategy “to become a successful manager of alcoholic drinks brands in international markets”.

The firm added that the move would be “immediately earnings accretive” and will accelerate its long-term earnings growth prospects.

The addition would bring C&C into the lager arena, with a leading presence in the Scottish market and a significant position in the North’s on-trade market, and strengthen the route to market for Magners cider in both regions. Management expects cost savings and revenue synergies of around €11m per year by 2012.

However, it wasn’t all good news for the group&.

C&C also reported a 5% year-on-year fall in revenue for the five months to the end of July largely driven by falling cider sales. Revenue in its cider division — comprising its twin Bulmers/Magners brands — fell 4%, while a 22% year-on-year fall was evident in the spirits and liqueurs arm.

Management has also kept its guidance for operating profit for the year to the end of February unchanged at the upper end of its range of €77m-€82m.

It added that a plan to invest €8m in its cider division will now be re-evaluated in light of the InBev acquisition.

Analysts had recently suggested that C&C needed to boost its overall product portfolio, beyond just varying its cider output, in order to boost sales volumes. The group said that this acquisition will meet that need.