C&C ripe for acquisition, says analyst

By Rod Addy

- Last updated on GMT

Related tags: Republic of ireland

C&C ripe for acquisition, says analyst
Drinks group C&C is ripe for acquisition, according to Phil Carroll, equity analyst at Shore Capital.

Recent reports have linked the beverage giant, which is headquartered in Dublin and whose global brands include Magners cider and Tennent’s lager, to takeover bids from SABMiller and Carlsberg.

In a note issued in advance of the company’s full year results, which are expected tomorrow, Caroll states: “We note the recent bid speculation in the Irish Independent over the weekend. An article states that both SABMiller and Carlsberg are potential suitors for C&C.

“This comes as no surprise to us given the structural growth that the premium cider market has been showing outside of Ireland and we have long believed C&C to be a potential bid candidate.”

Commenting on predictions for C&C’s annual results, Carroll said he expected pre-tax profit to be €106m, representing 16% year-on-year growth.

He added: “In terms of the key themes we expect to see in the results, we anticipate Magners to be in growth in the UK from both a revenue and volume perspective, following on from a strong Q3 performance.” He predicted that momentum would have continued in Magners’ international sales.

“We expect profitability in the Republic of Ireland to have declined slightly but for the operating margin to show significant improvement on the prior year.

“Both Gaymers [cider] and Tennent’s have been in a period of transition where management have been focusing on profitable business in the former and improving brand equity in the latter. Therefore, while respective revenues are expected by us to have fallen, we expect divisional margins to have improved as well as profitability.”

More details are expected on the progress of C&C’s acquisition of Hornsby’s [cider] in the US when the full year figures are announced. Full commercial management of the brand was anticipated to pass to C&C in April after it was bought from E&J Gallo Winery in November 2011.

The departure of C&C chief executive John Dunsmore in February was interpreted as an indication that the company was a takeover target.

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