SABMiller and Carlsberg may bid for C&C
It’s probably the same people who can hear the grass grow that have launched the recent rumour that some industry bigwigs are considering a bid for Irish drinks group C&C, the maker of Bulmers and Magners cider and Tennent’s lager. Actually, they have just rehashed speculation that has been flying around for over two years. In May 2012 the story that SABMiller, Carlsberg and Molson Coors (why not Heineken, too?) may have been nosing around C&C made some ripples in the Irish media. Still, none of the companies has been in direct contact with the board of C&C or made a final – and public – decision on whether to pursue a bid or not.
Heaven knows what has triggered the gossip now. The departure of C&C CEO John Dunsmore, which could have been interpreted as an indication that the company was a takeover target, occurred way back in December 2011.
Obviously, C&C has no interest in a sale, which could value the group at EUR 1 billion. Several sober-headed analysts also refuted the gossip, saying that C&C is "not likely" to be a takeover target in the short term.
On 16 May 2012 C&C reported pre-tax profits of EUR 110.9 million for the year to the end of February 2012, up from EUR 79.5 million reported for the previous year. Operating profit was also up, increasing by 9 percent, before exceptional items, to EUR 111.2 million, although revenues fell by 6.9 percent to EUR 716.7 million, against a backdrop of "challenging economic conditions" in Ireland and the UK.
C&C remains "cautious" about the near term prospects of its core markets and the continuing global growth of the cider category.
But noting that the company had finance capacity of EUR 500 million, C&C’s CEO Stephen Glancey turned the tables on his suspected suitors by indicating that C&C itself would consider acquisitions in the “Long Alcoholic Drinks and soft drink” categories but not spirits.
C&C exited the soft drinks business in 2007 when it sold its portfolio to Britvic. Last year C&C bought Hornsby’s, a U.S. cider business, for EUR 20 million from E. & J. Gallo Winery. The total U.S. cider market is estimated to be between 400,000 hl and 500,000 hl. Cider’s current share of the U.S. Long Alcoholic Drinks market is only 0.2 per cent, offering significant growth potential to C&C’s cider portfolio, should the acquisitions fail to materialise.
