C&C looking rosy as £45m deal boosts UK cider market share

Published on Monday 30 November 2009 21:15

IRISH drinks group C&C hit the acquisition trail again yesterday by agreeing to buy the UK cider assets of New York-based Constellation Brands.

C&C, whose chief executive is former Scottish & Newcastle boss John Dunsmore, is paying 45 million in cash for a deal that gives it an estimated 25 per cent of the UK cider market against big rival Heineken's 57 per cent. It follows C&C buying the Scottish and Irish businesses of Anheuser-Busch InBev in August, giving it Scotland's top lager, Tennent's.

C&C, whose Magners cider goes head-to-head with Heineken's Bulmers in the UK, said the deal is not conditional on clearance by the Office of Fair Trading, but will be subject to review by the OFT. The brands being acquired include Blackthorn, Olde English and Gaymers, and the acquisition doubles C&C's cider volumes to about three million hectolitres.

Analysts said the latest deal brought scale to the UK business of C&C, which Dunsmore joined after selling the old S&N Breweries to Heineken and Carlsberg in 2008. C&C said it expected to crystallise 3m of synergies by the end of the 2012-13 financial year. The costs of achieving these synergies will be about 1.5m, to be incurred in the 2010-11 financial year.

Dunsmore was in the United States talking to institutional investors yesterday. C&C operates the Bulmers brand in the Republic of Ireland, while Heineken also owns Strongbow cider in the UK.

The Irish group is to finance the deal via a new 60m bank borrowing line.

Constellation said it sold the assets to focus on its higher-growth, higher-margin wine, beer and spirit brands, and to cut group borrowings.