C&C bosses lobby shareholders to back €1bn bid for Spirit

Senior management at the Bulmers/Magners cider-maker C&C yesterday kicked off an intensive lobbying campaign to convince its shareholders that its intention to gatecrash a deal to buy a $1 billion UK pub group makes strategic sense, after its share price yesterday slumped by more than 10 per cent.

News leaked on Thursday evening that C&C had had an approach, believed to be worth about £760 million (€965 million), rebuffed by the Spirit Pub Company, which operates about 1,200 pubs across the UK. Spirit is under offer from Greene King, another British pubs behemoth, which has bid about £723 million. C&C is expected to shortly up its offer, however, as it attempts to build a "vertically integrated" operation that would give it control over its own distribution outlets for its brands.

Shareholders and analysts yesterday did not react well to the move, however, which took the markets by surprise. C&C’s share price opened on the Iseq down more than 8 per cent, falling as much as 12 per cent in the afternoon before finishing down just over 10 per cent.

Executives and representatives were, according to sources, ringing around shareholders and fund managers explaining the merits of the proposed deal, ahead of its interim results briefing next Wednesday.

Market sources were sceptical C&C has the management experience to run a chain of leased and branded pubs. The company does not own any pubs or other retail operations, and market sources said they failed to see the synergies or value for the company in pursuing the deal.

“At first glance, we struggle to see the strategic rationale for the bid,” said Goodbody stockbrokers. “Next week’s interim results will provide a platform for the company to provide more detail.”