C&C preparing ¤1bn bid for UK pub group
Bidding war expected after Spirit Pub Co rejects initial offer from Irish cider maker Pub group Greene King made offer for Spirit last month of some £660m
C&C, the Tipperary-based maker of Magners and Bulmers cider, is believed to be preparing a fresh bid for a UK-listed group of more than 1,200 pubs in an offer that may end up topping ¤1 billion.
Spirit Pub Company, which is currently subject to an offer of around £723 million (¤916m) from rival pub group Greene King, last night announced it had rejected an initial rival offer from C&C.
It was speculated in the UK last night that C&C had bid in the region of £760 million. Greene King made an offer last month for Spirit of about £660 million.
With debt the £760 million offer from C&C would attribute an enterprise value to Spirit of £1.4 billion.
It is understood that C&C, which sources say has been on the lookout for a pub group in the UK to give it a route to market for its drinks brands, only became involved after Greene King made its first offer. The Irish company is being advised by Rothschild.
C&C was understood to be last night preparing a statement confirming it wants to buy Spirit and laying out the rationale for the deal.
Spirit confirmed the bid from C&C to the London Stock Exchange after markets closed last night, and said C&C had until November 20th to say whether it would make a new offer or desist: commonly known as a “put up or shut up” deadline.
Spirit, large parts of which were once owned by Scottish & Newcastle (S&N), has an estate of more than 750 branded pubs and a further 450 or so leased outlets.
Its brands include Fayre and Square, Flaming Grill Pubs, John Barras Pub Company, and Wacky Warehouse. The group had revenues last year of about £758 million.
If C&C were to snatch Spirit from under the nose of Greene King it would represent a significant coup for the Irish company’s management team, led by highly-regarded former S&N executive Stephen Glancey.
Several of C&C’s top management, including Mr Glancey and also the group chairman Brian Stewart, are already familiar with the Spirit estate of pubs as S&N owned many of them until 2003. S&N was later bought by Heineken, although Spirit is now an inde- pendent listed company.
Part of the rationale for the deal being discussed internally within C&C is that the Irish company is highly cash generative, which would dovetail well with the financing model of the pubs, which are financed with long-term debt.
C&C was last night also preparing to tell its shareholders that a deal with Spirit would help it cement a “vertically-integrated” model. Many pub groups in the UK are or were once owned by drinks companies which use them as distribution outlets for their brands.
“It would be a shop window for C&C’s products,” said a source close to the company.
As well as Bulmers/Magners, C&C also owns the Scottish lager brand Tennents, Gaymers cider, Hornsby’s, Blackthorn and Ye Olde English cider.
It is believed among C&C’s senior management that if it successfully develops a vertically-integrated model C&C may also become attractive to Asian brewers looking for commercial deals for distribution routes into the UK.
In the Irish market C&C already has an element of vertical integration through its purchase of drinks distribution company Gleesons, for which it paid ¤58 million. In Scotland it this year purchased the part of Wallace’s Express, a wine and spirits wholesaler, that it did not already own.
Mr Glancey took over as chief executive of C&C in 2011. He has since overseen an ambitious expansion, including making a big bet on the growing US cider market with the purchase of the Vermont Hard Cider Company, which it bought for $305 million.