C&C considering selling English division, says investor

A C&C institutional shareholder says the Bulmers/Magners cidermaker is "actively evaluating" its options for its business in England and Wales, including selling off the struggling division, as US investors including Morgan Stanley continue to build larger stakes in the company.

Third Avenue Management, a New York-based fund manager that bought a small stake in C&C earlier this year, told its clients in a recent note C&C is working on a strategy to address its problems in England and Wales, where it suffers from a poor distribution network and heavy competition.

"The company is actively evaluating solutions to address these issues, which could take several shapes including an acquisition, a partnership or a divestiture of the UK business altogether," said Third Avenue, in a note written by fund managers Matthew Fine. The seemingly well-informed statement echoes recent comments by Kenny Neison, the chief financial officer of C&C.

Last October, when C&C planned a since-aborted €1 billion bid for the Spirit pub group, Mr Neison said it could “downsize” its business in England and Wales if it failed to land Spirit.

C&C is understood to be openly telling members of the investment community it has no intention of launching another bid for a pub group in England.

That leaves it with options including buying or partnering with a distributor, as it has in Ireland and Scotland, or selling its English cider division entirely. Some US institutional investors are continuing to build up stakes in C&C, possibly in anticipation of some sort of future deal.

Morgan Stanley increased its stake on Tuesday from below 3 per cent to 4.8 per cent, while FMR has recently built its stake up to more than 9 per cent.

Setanta Asset Management and State Street also recently increased their shareholdings in C&C, which declined to comment on Tuesday.

In an interim management statement in January, C&C said its England/Wales cider volumes fell almost 10 per cent in the third quarter, while net revenues were down 18 per cent.

In the six months to the end of last August, the England/Wales division’s revenues fell more than 12 per cent to fall below the €100 million mark, while operating profits fell 37 per cent.

The company said in January that it was working on “a range of initiatives” to address the situation.

In Third Avenue's note to its clients, Mr Fine noted that Mr Neison and Stephen Glancey, C&C's chief executive, previously helped run and eventually helped to sell Scottish & Newcastle, which is now owned by Heineken and makes Strongbow cider.