Adnams has hit back at criticism over the business’s recent expansion and ‘anachronistic’ share structure.
In an open letter to shareholders, investment company Guinness Peat Group (GPG) said ‘urgent action’ was required to stop the ‘destruction’ of shareholder value in the company.
GPG, which holds a 5.39% stake, said Adnams’ expansion of its nine-outlet Cellar & Kitchen store concept was not a ‘core competency’ of the company.
The Southwold-based wine merchant, brewer and pub company had increased investment by about £21m since 2000.
It also built a new brewery and distribution centre. ‘The harsh reality is that present levels of profitability are indicative of this entire investment having been wasted,’ said GPG.
GPG also called for an overhaul of Adnams’ current dual share structure, which it said was anachronistic and left the board unaccountable to most of its shareholders.
Adnams chairman Jonathan Adnams admitted that the company’s 2008 results had been disappointing, but blamed the nationwide slump in beer sales and the pub trade.
The company had temporarily halted the expansion of Cellar & Kitchen, but believed the strategy was ‘well-founded’, he added. And there were no grounds to think that shareholders would support a change to the share structure.
‘Whilst the board welcomes constructive shareholder engagement, it is unwilling to spend shareholders’ time and money pursuing the special interest agendas of specific shareholders which it does not believe command wider support,’ said Adnams.
Written by Richard Woodard