C&C sells soft drinks unit for €249m
Drinks group C&C is to focus purely on alcohol following the sale of its soft drinks and bottled water division to Britvic. The deal sees the iconic Ballygowan water brand leaving Irish ownership.
C&C sold its soft drinks division to the British company for €249.2 million, saying that the sale would allow the group to concentrate on maximising profits in its higher-margin alcoholic drinks business, which is dominated by Magners and Bulmers ciders.
The soft drinks division was not for sale, but the group said it had received a "compelling" offer from Britvic.
C&C spent 18 months trying to turn round the division, which was hurt by a fall in fizzy drinks sales and has been overshadowed by the successful launch of Magners in Britain.
"Following this disposal, the group has a sharper business focus and will continue to capitalise on the exciting growth potential presented by our cider, spirits and liqueurs brand portfolio," said C&C chief executive Maurice Pratt.
The streamlined business has also become more attractive to potential buyers, analysts commented yesterday.
However, a spokesman for C&C denied that the sale of the soft drinks division was a sign that the group was readying itself for a trade sale.
C&C said that it would use €150 million of the cash it receives through the sale to increase its share buy-back programme, announced last week, to €300 million.
The buy-back programme will now see the group acquire about 8 per cent of its own stock.
Mr Pratt said that the price recognised the value of its brands, which include Club Orange, Club Energise, Cidona and MiWadi, as well as Ballygowan "pure Irish water".
C&C also owns the franchise for distribution of 7Up and Pepsi in Ireland. Britvic already has an agreement with PepsiCo for the distribution of these drinks in Britain.
Although it accounted for €270 million of C&C's €981 million sales in the year ending in February, the soft drinks division contributed just €16 million of the group's €212 million profit. Ballygowan performed well over the period, however.
The division's gross assets are worth €151 million.
Britvic chief executive Paul Moody said that the deal would give it the opportunity to expand the Britvic brand in Ireland.
"We're pleased with the price and the brands we've taken on," he said.
The company noted that Ireland had the highest per capita consumption of carbonated soft drinks in Europe (122 litres per head of population compared with an average of 100 litres per head) and that consumption of bottled water, while relatively low, was growing rapidly.
C&C's disposal was hailed as a good move by analysts and the market, with the price fetched by the division seen to be high.
The company's share price rose 3.5 per cent on the Irish Stock Exchange, closing at a price of €12.40, up 42 cent.
More than 90 per cent of C&C's earnings are now generated by cider, and the company is currently piloting Magners in Barcelona and Munich.