Whiskey sale nets C&C €300m

C&C is to sell its Tullamore Dew-led spirits division for €300 million – a full €100m more than broker estimates of the unit’s value.

C&C shares jumped by 11% initially to close at €3.59, up 15 cent, a 4.360% gain.

Scotch whisky distiller William Grant is paying €300m for the spirits and liqueurs unit – Tullamore Dew Irish whiskey, Carolans, Frangelico and Irish Mist.

C&C will use the cash to reduce debt to negligible levels and focus on its growing Magners cider and Tennant’s beer markers. William Grant produce the iconic single malt Scotch whisky Glenfiddich and plan to invest in Ireland and join Tullamore Dew with their five global brands.

Goodbody analysts Liam Igoe said the announcement is positive news.

“The price is a full €100m higher than we have included in our sum-of-the-parts valuation (30c/share),” he said.

Bloxham Stockbrokers said the deal enhances the strategic value of C&C to a global drinks company.

“Aside from being a very important financial transaction, this sale further clarifies C&C’s strategic position.

“It will now be the clear No 2 cider producer in the combined UK and Ireland market, and the No 1 beer producer in Scotland,” Bloxham added.

Davy analysts Barry Gallagher said C&C is now a pure play LAD (long alcoholic drink) business that is virtually debt-free – €70m net debt post the deal – that will be able to look at attractive assets/brands to support its overall growing LAD business

“We estimate C&C has the ability to spend €350m on such acquisitions in the future,” he said.

C&C said that €1.5m in overhead costs associated with the transferring division will remain with C&C, but said the management team and employees will transfer to Grants.

“The division employs 57 people in Ireland. William Grant will operate the division’s packaging facility located at the group’s manufacturing site in Clonmel, Co Tipperary. William Grant has confirmed its commitment to building a strong business in Ireland and to maintaining and developing current operations across the Irish sites, including C&C’s manufacturing site in Clonmel,” C&C said.