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Bargain Booze owner Conviviality (CVR) has offered to buy 127 Central Convenience stores from WS Retail, following the collapse of its parent Palmer & Harvey into administration.
Conviviality has offered a cash consideration of £25m for 109 convenience stores and the rights to a further 18 franchisee-operated stores under the Central Convenience fascia.
If the offer is accepted, the Company will fund the Acquisition through the completed placing of 8,000,000 new ordinary shares at a price of 375p per share to raise gross proceeds of £30m.
Conviviality said the placing is conditional “inter alia” on the acquisition being completed by 4.30pm today and has been fully underwritten by Investec Bank.
It said the deal would provide “enhanced scale and reach” for its retail division, particularly strengthening its presence in the south and south west of England.
The offer would add 127 convenience stores including 20 petrol forecourts, stores incorporating 47 Post Offices and 18 franchisee operated stores, while also securing wholesale supply to owned and franchised stores.
Conviviality said the acquisition and the placing are expected to be earnings enhancing in the group’s first full financial year of ownership of Central Convenience.
For the 53 weeks ended 8 April 2017, WSR generated unaudited turnover of £75.7m and EBITDA of £3.5m.
Conviviality CEO Diana Hunter commented: “We are pleased to have finalised terms for a potential acquisition of Central Convenience as it provides a clear opportunity to accelerate the growth and reach of the existing Conviviality Retail business, notably broadening our geographic footprint in the south and south west of England.
“The acquisition, if effected, will support our strategic goal to be the drinks and impulse sector’s leading independent distributor and we believe that potential exists for a range of synergies and increased returns for Conviviality’s shareholders. We look forward to welcoming colleagues from Central Convenience to the Conviviality Group.”
Morning update
This week’s edition of The Grocer writes about how discount chain Poundland is “bound to be put up for sale” in the new year as its South African owner Steinhoff battles to survive.
Also in this week’s edition is the story that shoppers are set to trade down this Christmas as prices rise, Bread Holdings heads for sale with soaring sales and sales rise at Duck specialist Gressingham Foods.
On the markets this morning, Conviviality shares are up 2.2% to 386.2p so far this morning.
The FTSE 100 has edged down 0.1% to 7,439.9pts this morning.
Early risers include C&C Group (CCR), up 2.8% to €2.95, Science in Sport (SIS), up 2.7% to 77p and TATE & Lyle (TATE), up 1.8% to 694.5p.
Fallers include Crawshaw (CRAW), down 2.2% to 11p, Real Good Food (RGD), down 1.4% to 21.2p, Premier Foods (PFD), down 1.2% to 42p and Just Eat (JE), down 1.2% to 767p.
Yesterday in the City
The FTSE 100 ended the day down 0.7% to 7,448.1pts.
Ocado (OCDO) ended the day up 0.6% to 343.6p after yesterday’s fourth quarter trading update that showed a slowdown in sales growth amid capacity constraints relating to a lack of drivers. The stock had risen as high as 365.8p in morning trading before easing back.
There were other strong retail risers, including Debenhams, Dixons Carphone and Mothercare, but there were fewer notable risers in the grocery sector.
Glanbia (GLB), rose 1.4% to €15.47, Greggs (GRG) rose 0.7% to 1,349p, Science in Sport (SIS) rose 0.7% to 75p and Premier Foods (PFD), up 0.6% to 42.5p.
PZ Cussons (PZC) dropped 5.3% to 310.5p after announcing first half profits will drop by around 10%.
Other fallers included British America Tobacco (BATS), down 2.1% to 4,924.5p, Dairy Crest (DCG), down 2% to 556.5p, Associated British Foods (ABF), down 1.5% to 2,860p, Unilever (ULVR), down 1.2% to 4,140p, Tate & Lyle (TATE) down 1% to 682.5p and WH Smith (SMWH) down 1% to 2,188p.
Also down were CARR’s Group (CARR), down 4.2% to 123.5p, Marston’s (MARS), down 3.9% to 113.7p and Hilton Food Group (HFG), down 2% to 838p.
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