Might C&C Group and Magners find a new home?

Might C&C Group and Magners find a new home?

For all C&C Group has suggested this week that it may seek to acquire more drinks assets, there could be equally as much scope for a takeover of the cider and beer business.

Could it be a case of here we go again for C&C's CEO, John Dunsmore? Having moulded C&C into an Irish-tinged version of Scottish & Newcastle (S&N), the ex-S&N CEO might end up going full circle by selling his new business on - just as S&N was sold to Heineken and Carlsberg.

It's been a good week for C&C, which has seen a rebound in fortunes since Dunsmore & co took the helm in late 2008. Magners volume sales have, finally, stabilised in the UK after three years of declines, while the group has acquired the popular Scottish lager brand, Tennent's, and supplemented its cider orchard by acquiring Gaymer Cider Co from Constellation.

There could be more acquisitions on the way if the firm's half-year statement this week is to be taken at face value.

C&C achieved a net cash surplus of EUR20.8m (US$29.2m) in the half-year and said that the strength of its underlying balance sheet was "clear". The firm said: "This strength will provide stability in volatile markets and positions the group well to invest further for growth and expansion."

Commenting on the disposal earlier this year of the firm's spirits & liqueurs business to William Grant & Sons, Dunsmore told analysts: "We wanted to be flexible for whatever we might want to do going forward - we didn't want to be cash light."

However, so far there has been little comment on the reverse possibility: a takeover of C&C by a brewer keen to bulk up its presence in the UK market and tap the strong potential for Magners cider overseas. Surely, C&C Group's balance sheet might tempt potential bidders? This possibility has probably strengthened following C&C's disposal of its spirits arm - only a rump beer and cider business now remain.

Molson Coors is one name that would be high on the list. The brewer could benefit in scale from C&C Group's cider business and, by taking over the rights to Tennent's, would also achieve its growth ambitions in Scotland overnight.

When Dunsmore took the reins at C&C, some observers speculated that his role might be to prepare the group for a sale. On the other hand, he appears to be relishing the challenge at C&C and is less than two years into the task. Note also that he is on a five-year bonus incentive at the firm.

There is also still work to be done, given the tough economic situation in C&C's home market of Ireland and the fact that Magners cider volumes in the UK, although having grown in the six months to the end of September, still lag average cider sales growth in the UK.

C&C may not yet be ripe for the picking, but this is one to watch.