DUBLIN (Reuters) - Irish cider maker C&C (GCC.I) bought the wholesale arm of troubled British drinks firm Conviviality (CVRC.L) for a nominal fee on Wednesday, safeguarding most of the jobs threatened by the parent company’s expected collapse.
Britain’s largest franchised off-licence and convenience chain, which also operates more than 700 stores under the Bargain Booze and Wine Rack brands, said on March 29 it was likely to collapse into administration within two weeks, putting some 2,600 jobs at risk.
The group hit trouble last month when it failed to allow for a 30 million pounds ($42 million) tax bill in its cash flow forecast, and has since failed to raise 125 million pounds in an emergency cash call.
C&C, whose shares had jumped 9 percent to 2.87 euros in late trade, said it had bought Conviviality’s wholesale arm Matthew Clark and its wine, spirits and craft beer distributor Bibendum, as well as four smaller businesses belonging to the two.
Davy Stockbrokers said the deal would be transformational for C&C’s UK platform. “While not without risk - maintaining supplier and customer relationships will be key - we believe the transaction makes economic and strategic sense and will help reshape the equity narrative,” Davy analysts wrote in a note.
Around 2,000 staff will join C&C as a result of the deal, a spokesman for the Irish maker of Magners, Bulmers and Tennents said.
Matthew Clark, the largest independent distributor to the UK on-trade drinks sector, which Conviviality bought for 200 million pounds less than three years ago, employees 1,400 people, according to its website.
C&C said it would provide funds from its existing facilities to support the working capital and other cash requirements of the businesses, which had gross revenue of 1.2 million pounds in the 12 months to the end of April 2017.
Anheuser-Busch InBev (ABI.BR), the world’s biggest brewer, will provide additional financial support to the transaction, C&C said.
($1 = 0.7102 pounds)
Reporting by Padraic Halpin; Editing by David Holmes