(Reuters) - Stock Spirits Group’s (STCK.L) second-largest shareholder piled more pressure on the vodka maker on Thursday, raising questions about its deal-making strategy and urging the company to pay a special dividend.
Western Gate Private Investments, which represents the family office of Portuguese businessman Luis Amaral, has repeatedly sought to change Stock Spirits’ strategy and management, having successfully ousted top boss Chris Heath more than three years ago.
The investor said on Thursday that while Stock Spirits’ management was improving operating performance, the board was “unwilling” to return cash to investors and had overseen a “poor performance” since its stock market listing in 2013.
The company's shares, which have fallen 6% since its initial public offering (IPO) in 2013, were up 1.3% at 1030 GMT. The stock has widely underperformed the broader midcap index .FTMC, which has risen about 40% in the same period.
Stock Spirits, in an e-mailed response to Reuters, said it continued to assess a range of “more meaningful and value-creating M&A opportunities” in existing and new categories and markets.
“However, as we have consistently said, if such opportunities are not realised, we will of course consider making additional shareholder distributions,” the company said.
Western Gate, which has a 10% stake in Stock Spirits, called for a special dividend of 0.1219 euro (£0.1047) per share and asked the company to review how it allocates capital.
“Since 2017, the company has spent 47.5 million euros on three acquisitions. Despite this investment, shareholders will not see any returns on this invested capital until 2023,” Western Gate said.
Panmure analyst Matthew Webb said that institutional shareholders were likely to support the management’s current strategy.
“This proposal (by Western Gate) is much less aggressive than previous episodes,” he said.
In January, Western Gate had called for the removal of Stock Spirits’ chairman and raised questions about its growth prospects. M&A and dividend have been talking points for Western Gate in the past.
Stock Spirits, the maker of 1906, Stock Prestige and Vodka No.1, relies on Poland and the Czech Republic for three quarters of its revenues. The company’s profit for the year to Sept. 30 more than doubled, with volume growing by 8%, driven by solid demand for its premium vodka brand.
Reporting by Tanishaa Nadkar and Pushkala Aripaka in Bengaluru. Editing by Rashmi Aich and Jane Merriman