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December 1, 2009 12:05 am
C&C, the Irish drinks company that owns Magners cider, has bought the Gaymer cider company from Constellation Brands. The deal is its second big acquisition since a change of management in November last year.
C&C is paying £45m ($74m) for the company, which owns the Blackthorn, Olde English and Gaymers brands. Together, the three brands sell almost twice as much cider as Magners in the UK.
The Gaymer cider company achieved sales of £64m in the year to February 2009, with earnings before interest, tax, depreciation and amortisation of about £5.4m.
The purchase, which will be financed with a new £60m bank facility, will bring C&C’s net debt to ebitda ratio to close to 3 times, analysts say.
It follows the £180m acquisition in August of Tennents, the Scotland-based lager business. That deal was granted approval from the Office of Fair Trading on Monday.
C&C did much to raise the profile of cider in the UK, taking on Bulmers, which is now part of Heineken.
Magners was once hailed as a marketing success, turning a drink once seen as downmarket into a premium-priced product.
But it overexpanded and was forced to mothball capacity at its Clonmel crushing and fermenting plant and write off stock.
The new management team, led by John Dunsmore, chief executive, has sought to abandon its position as a niche cider maker and expand into other alcoholic drinks.
Joe Gill, analyst with Bloxham Stockbrokers in Dublin, said: “Coming shortly after the purchase of Tennents, this deal will certainly stretch management resources.”
Investor confidence in the new management was knocked in July when the company admitted that what it had claimed was a rise in revenue was in fact a fall. Stephen Glancey, the finance director who along with Mr Dunsmore had joined from Scottish & Newcastle, called it “human error” saying “there’s nothing wrong with our accounting systems”.
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