C&C Group to Acquire US Cider Marker For $305 Million
C&C Group, the Irish and UK branded cider and beer producer, is acquiring the Vermont Hard Cider Company, an independent, premium, craft cider company in the US, for $305 million (Eur233 million). VTHCC owns a leading US cider brand, Woodchuck, a well-invested cidery inVermontand a national distribution platform. The acquisition will accelerates C&C’s growth prospects, increasing its exposure to the US cider category, which grew approximately 60% in the first six months of 2012.
The business being acquired is expected to generate about $15 million of EBITDA for the 12 months ending 31 December 2012. The deal is expected to be immediately earnings accretive.
Stephen Glancey, chief executive of C&C Group, says: “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.”
C&C has exported its Magners cider brand into the US for over a decade. In 2011, C&C acquired the Hornsby’s brand, on the US West Coast, as a first step in building a presence in domestic US cider.
However, while C&C is expanding its international operations, its domestic business faces challenging trading conditions in the UK and Ireland. In the the six months ended 31 August 2012, C&C Group reported a 2% fall in net revenue to Eur263.4 million and a 2.7% decline in operating profit before exceptional items to Eur65.6 million, as strong performances from the Tennent’s beer business and the international division helped to offset weak core cider markets.
International volume growth, including acquisitions, was 53%, representing 9% of the group’s total branded volumes. Tennent’s was successfully launched in several new markets including Italy, Russia and Ukraine.
“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,” comments Stephen Glancey. “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%.”
