UK/IRELAND: C&C Group will continue to eye acquisitions - analyst

By | 7 August 2012

C&C will keep its eye on acquisitions despite tough times, according to analysts

C&C will keep its eye on acquisitions despite tough times, according to analysts

C&C Group will remain an "active consolidator" and the right deal could add around 10% to its earnings, an analyst has forecast.

The Dublin-headquartered group reported a "challenging" first quarter in June due to poor weather in the UK and Ireland. Its cider volumes, including Magners, fell 21.6% in the UK, in the three months to the end of May. 

But, in a note today (7 August), anlaysts at Nomura said it is "warming up" to the firm. "Given its record of buying undermanaged assets and extracting synergies, we see further value creation from potential acquisitions," it said. "We estimate that the right deal could add over 10% to earnings."

In 2009, C&C bought the Tennent's lager brand and Wellpark Brewery from Anheuser-Busch InBev for GBP180m (US$292m). Later the same year, it bought The Gaymer Cider Co from Constellation Brands for GBP45m (US$75m).

Nomura acknowledged the company operates in "tough" markets. But the note added: "We see a number of levers for the company to protect profitability and outperform versus international brewing peers.

"We see scope to drive greater efficiencies in the Scottish and Republic of Ireland route to market as well as opportunities to grow the top line through targeted investments in both markets’ pub-loan books." 

On media specualtion earlier this year that C&C could be a target for SABMiller and Carlsberg, Nomura said it did not view the Irish group as a "must-do transaction", given its 90% exposure to the UK and Ireland. 

Sectors: Beer & cider

Companies: Constellation, InBev, C&C Group, Carlsberg, SABMiller

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