C&C share price rises as sale plan enthuses investors

CIDER MANUFACTURER C&C has seen its share price rise almost 5 per cent as investors reacted enthusiastically to news of a €300 million deal to dispose of its spirits and liqueurs division.

Subject to shareholder approval, the beverages group will sell the division that produces brands such as Tullamore Dew, Carolans, Frangelico and Irish Mist to Scottish distiller William Grant & Sons.

C&C will use the €300 million cash consideration to reduce its debt and to invest in the development of its cider-led alcohol drinks portfolio.

It estimated that the transaction will result in a net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) of 0.6 times, based on the group’s 2009/2010 performance.

William Grant expressed its commitment to maintaining and developing the division’s operations across its Irish sites, which include a packaging facility based at C&C’s manufacturing base in Clonmel, Co Tipperary.

The division employs 57 people in Ireland and consultations will be carried out with these employees.

William Grant distils a number of Scotch whisky brands including Glenfiddich Single Malt.

The family-owned company has been looking to expand its non-Scotch portfolio and said that Irish whiskey was a natural fit.

“C&C’s spirits business provides a unique opportunity to acquire a number of significant brands and enter the highly desirable and dynamic Irish whiskey category,” said Stella David, chief executive of William Grant.

The disposal is expected to be completed by June 30th, 2010.

“The agreement to sell to William Grant was not an easy one but is, we believe, in the best interests of all shareholders,” said C&C’s group chairman Tony O’Brien.

In the year to February 28th, 2009, the division reported revenues of €85.9 million and Ebitda before exceptional items of €16.1 million.

According to C&C’s estimates, the division’s gross assets amounted to about €109.7 million at February 28th, 2010.

“While the division represents a comparatively small component of C&C’s overall earnings, the consideration reflects the quality of its brand portfolio and its strong market positions,” C&C’s chief operating officer Stephen Glancey said.

Under the terms of the agreement, C&C will retain certain overhead costs currently allocated to the division. This came in at €1.5 million in 2009/2010.