The alcoholic drinks retailer and supplier Conviviality is poised to sell its wholesale business to the company behind the cider brand Magners and Glaswegian lager Tennent’s if the owner of brands such as Wine Rack and Bargain Booze enters administration later on Wednesday as expected.
C&C, which also owns Bulmers cider and distributes the American beer Pabst Blue Ribbon in Ireland, said it was in “advanced discussions” to buy Conviviality’s Matthew Clark and Bibendum businesses, which supply more than 23,000 hotels, pubs and restaurants across the UK.
The deal, which C&C said had the backing of global drinks group AB InBev, would see the Irish group take control of the UK’s largest indepedent distributor to the UK on-trade drinks sector for a nominal amount, less than three years after Conviviality bought the wholesaler Matthew Clark for £200m.
Under the terms of the deal, which is conditional upon the appointment of administrators to Conviviality but expected to complete later this morning, C&C said it would provide funds meet the cash needs of the business and AB InBev would contribute additional financial support.
Conviality’s acquisition of Matthew Clark in October 2015 for £200m and wine specialist Bibendum the following May formed part of an ambitious expansion strategy by former chief executive Diana Hunter, that saw the group move away from corner-shop off-licences to distribution to the trade.
Margin erosion in the wholesale business prompted two profit warnings in a week, which combined with an unexpected tax bill and a failed capital raise resulted in Ms Hunter’s sudden resignation last month and the group’s expected fall into administration.
C&C chief executive Stephen Glancey said his company “[knew] the Matthew Clark and Bibendum businesses very well.”
“They are great businesses with unparalleled on-trade market access, a wide range of supplier relationships and supported by a knowledgeable and loyal employee base,” he added.
“The last few weeks have been challenging for employees, customers and suppliers alike. We hope today’s announcement can put an end to this period of disruption and uncertainty. We look-forward to working with our new colleagues and other stakeholders to bring stability and restore the group’s position as one of the leading and most respected drinks suppliers to the UK hospitality sector.”