C&C shareholders can raise glass to UK pub investment

Finally some positive news for C&C shareholders to toast. Almost 2½ years after the Irish cider and beer company backed out of a badly-received €1 billion bid to buy UK bar group Spirit Pub, chief executive Stephen Glancey’s second attempt to secure direct access to the England and Wales on-trade market has received a better hearing from the market.

Shares in the company, which has had a torrid time so far this year amid sterling weakness against the euro and as it continues to rue a foray into the American cider market in 2012, managed to rise as much as 2.2 per cent on Monday.

This time around C&C has opted to go for a capital-light entry to the UK pubs market, investing £37 million (€40.1m) for a 47 per cent equity stake in the Admiral Pub Company, which owns and operates 845 pubs.

Analysts at Investec, for one, cheered the deal. "We believe that this low-risk, low-capital exposure entry into the pub estate sector with significant route-to-market benefits for C&C's England and Wales business is a positive use of capital," the brokerage said.

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Goodbody Stockbrokers analyst Patrick Higgins said the deal was a "good investment" as C&C has historically struggled in the England and Wales on-trade market.

The agreement should offer an additional boost to C&C following on from the Irish company’s new UK distribution agreement with brewing giant AB InBev, agreed late last year.

And while investor sentiment towards C&C has been dented considerably in recent times by the sterling’s ongoing slump against the euro, the weaker UK currency has made the deal cheaper for the company.

Still, the transaction is likely to signal last orders for the group’s massive share buyback programme, which has been ongoing in recent years.