C&C Group, the Irish cider producer, has conditionally agreed to acquire American cider firm Vermont Hard Cider Company (VHCC) for $305m (c£190m), as it reports an 18.6% fall in UK cider volumes for the six months to 31 August.
The VHCC transaction, which is expected to complete by the end of the C&C’s current financial year subject to approval by US authorities, is said to generate circa $15m of EBITDA for C&C the 12 months ending 31 December 2012. VHCC owns the US cider brand Woodchuck, a cider plant in Vermont and a national distribution platform in the US.
Stephen Glancey, chief executive of C&C Group, said: “C&C is delighted to announce its agreement to acquire the Vermont Hard Cider Company. This transaction transforms our international cider business and accelerates our growth prospects. We intend to invest in the company to capitalise on the growth opportunities presented by this business.”
Bret Williams, president and chief executive of VHCC, said: “We are delighted to join the C&C Group and to retain the values which define our success. We believe that C&C is the natural partner for our business. We share heritage, values and culture and are both strong believers in the future growth of cider. Our decision to continue to lead the business and become shareholders in C&C, as part of this transaction, reflects that belief.”
C&C Group this morning announced that revenues fell 2% to €263.4m in the six months to 31 August, with operating profit before exceptional items down 2.7% to €65.6m. The 18.6% fall in UK cider volumes was mitigated by an increase in global sales of 32.7%. Volumes in Ireland fell 6.6%.
Meanwhile, volumes of its Tennent’s beer brand grew 2.4%.
Group operating margin was broadly stable, at 25%. Basic Earnings per Share grew 9% to 16.5%.
C&C Group also announced the appointment of Joris Brams to the board as managing director of its International division with immediate effect.
Glancey said: “Despite a very challenging trading and economic backdrop, the group’s results for the period demonstrate the resilience of our business model with a marginal operating profit decline of 2.7%.
“While our core cider brands Magners and Bulmers both saw volume declines in the period, other parts of the business performed well. The Tennent’s brand continues to outperform with net revenue and operating profit growing ahead of the Scottish beer market. Our International business, including acquisitions, continues to grow at an exciting pace, with volumes increasing by over 50%.
“During the period, the decision was taken to re-allocate some investment toward direct support of customers via price and trade loans. Customer demand for brewery financing continues to grow in Northern Ireland and Scotland. Brand investment focussed on support for three new TV campaigns for Bulmers, Magners and Tennent’s. Brand health scores remain high across our core markets, emphasising both the importance and success of these campaigns. Innovation remains a key priority and in the period Magners Berry, Gaymers flavours, Tennent’s Original Export and Caledonia Smooth were launched.
“The C&C business model seeks long term growth through our brand-market combination, combining brand investment with a focus on local markets. We have a long history in the development of cider and are well positioned in terms of our brands and our expertise to benefit from the category’s domestic and international development. In the short term, we are delighted to confirm a resilient performance in tough markets at the same time as laying some exciting foundations for accelerated international growth.”
