CURRENT ACCOUNT: C&C tells Current Account that it will not be making a move on troubled British cider-maker HP Bulmer, which this week announced its fifth profit warning within nine months.
It is not a hard story to believe, since the Irish company probably needs to spend a bit more time licking its abandoned-flotation wounds before making any big plays in the market. There's also the small matter of high debt levels, which, at about €700 million, must act as a constricting factor when it comes to C&C making any type of purchase. Still, commentators say that an acquisition could, in theory at least, be possible. There is certainly some value to be had, with the UK cider-maker's shares having shed about 75 per cent of their value since February.
The biggest attraction in HP Bulmer for C&C would be the Bulmers brand, which the Irish company can currently only market at home. In an ideal world, this would be stripped out from the remaining Bulmers businesses and sold off alone, probably at a manageable price of some tens of millions. In practice, however, the separation of Bulmers from its owner's other brands might be difficult in production terms.
Another compelling notion is that an acquisition of HP Bulmer in its totality would give C&C its desired stock market listing, without any of the unpleasantness seen earlier this year. There would be no Irish listing however, which was what C&C was seeking in the first place.
There is also the volatility of the cider business outside the Republic. Witness the troubles at HP Bulmer and you get a sense of how fickle drinkers in the UK can be. Why would C&C want to dilute its Irish success with such massive risk? All in all, perhaps the best thing for C&C to do at the moment is to steer clear and hope that its rivals do the same.
Whatever happens, HP Bulmer has admitted the defeat of its current strategy, appointing a seasoned company doctor to clear up its accounts. The man in question has previously been involved with London's Millennium Dome, arguably the very definition of a venture having lost its way. The direction Mr John Darlington will favour for HP Bulmer is as yet unclear.
