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Conviviality sale: Bibendum, Matthew Clark deal complete, says Magners owner

See our latest article on the Conviviality sale here on the sale of its retail arm.

See the original story below.

Magners cider owner C&C Group announced this morning (4 April) that it was in ‘advanced discussions’ with crisis-hit Conviviality to take on the Matthew Clark and Bibendum wine, beer and spirits supply businesses, with support from the world’s largest brewer, AB InBev.

A deal was subsequently completed, said C&C in a later announcement the same day, adding that it ‘now owns 100% of the issued share capital of Matthew Clark Bibendum’. No further information was immediately available.

C&C had earlier said that a deal would only happen if Conviviality formally appointed administrators for the ‘Conviviality Brands Limited’ arm of the group. It added that Conviviality shareholders would receive only a ‘nominal sum’.

Conviviality said last Thursday (29 March) that it intended to place itself in administration within 10 working days after failing to raise £125 million needed to keep the company afloat. It said at the time that it had also received sale interest from several suitors.

Earlier today (4 April), Conviviality confirmed discussions with C&C over its ‘Direct’ business and said that it was also exploring a sale of its Retail division, including Bargain Booze and Wine Rack stores, after interest from other parties.

A deal with C&C and AB InBev could reassure a significant number of Conviviality’s 2,600 employees, at least in the short-term, and would also expand the buyers’ distribution network for their brands.

Conviviality Direct, which is the division that includes Bibendum and Matthew Clark, is the largest of the firm’s three business arms and generated £1.04 billion of the company’s £1.56bn net sales in its 2016-2017 financial year, according to Conviviality’s 2017 annual report. Wine made up 37% of Bibendum and Matthew Clark combined sales.

C&C said, ‘Consideration for the shares will be a nominal sum, and C&C will provide sufficient funds to support the on-going working capital and other cash requirements of the business. In addition, AB InBev will provide additional financial support to the transaction.’

C&C added, ‘At completion, Matthew Clark Bibendum will have £102 million of working capital facilities provided by its current lender group, repayable in instalments over the 12 months following completion.’

Gross assets of approximately £230 million are expected to be acquired at completion, C&C said.

A deal would include subsidiary firms Catalyst, Peppermint, Elastic and Walker & Wodehouse.

C&C said that the deal would ‘provide direct access to an incremental c.23,000 predominantly on-trade customers across the UK comprising leading hotels, restaurants, pubs, clubs, and bars’. It would also allow it to access Bibendum’s wine distribution network in London and the south-east.

AB InBev already works with C&C in the UK, and Conviviality was also a key launch partner for AB InBev’s Bud Light beer brand in the UK from March 2017 onwards.

Trading in Conviviality’s shares has been suspended since mid-March at the company’s behest, after it discovered an unpaid £30 million tax bill due on 29 March.

Conviviality’s rapid demise has surprised parts of the wine trade and investment community, with more questions likely to be asked about how the firm found itself in such a situation.

C&C’s CEO, Stephen Glancey, said, ‘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.’

Copy last updated 15:30 UK time on 4 April. 

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