The owner of Bulmers, Magners and Tennent’s – Dublin-based C&C Group – is to buy the wholesale arm of struggling Bargain Booze owner Conviviality, safeguarding more than 1,800 jobs.
Conviviality is expected to appoint administrators on Wednesday and, ahead of the move, C&C said it planned to buy the Matthew Clark and Bibendum drinks wholesalers for a nominal fee. It will provide funds to support the continued operation of their 18 depots around the country. The deal is dependent on Conviviality going into administration.
Last week Conviviality said investors had refused its request for £125m of new money, which it needed to stave off bankruptcy after a string of shock profit warnings.
The group has since been attempting to find buyers. On Wednesday, Conviviality said it was still is discussions with a number of parties about the sale of its Bargain Booze and Wine Rack retail chains, which employ about 1,800 people.
Shareholders in the company, which has annual sales of £1.6bn, are likely to receive “little-to-nil” value for their shares, which have been suspended on the junior AIM stock market since 14 March after a series of profit warnings.
The first warning was blamed by the company on an erroneous calculation made by a member of its finance team and weakening profit margins. It later admitted it had not budgeted for a £30m tax bill.
Conviviality’s chief executive, Diana Hunter, stepped down after City analysts criticised the company’s financial controls and processes.
The firm is a major player in the UK drinks industry, supplying more than 700 off-licences and serving more than 23,000 pubs and restaurants including the JD Wetherspoon chain, via Bibendum and Matthew Clark, which is the UK’s largest distributor to pubs and restaurants.
C&C Group said it would run the wholesale operation as a separate business.
Stephen Glancey, group chief executive of C&C, said: “We know the Matthew Clark and Bibendum businesses very well. They are great businesses with unparalleled on-trade market access, a wide range of supplier relationships and supported by a knowledgeable and loyal employee base.
“The last few weeks have been challenging for employees, customers and suppliers alike. We hope today’s announcement can put an end to this period of disruption and uncertainty. We look forward to working with our new colleagues and other stakeholders to bring stability and restore the group’s position as one of the leading and most respected drinks suppliers to the UK hospitality sector.”