City snapshot: CVC agrees £767m deal to buy listed drinks player Stock Spirits

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Private equity player CVC has agreed a deal to buy Stock Spirits, the listed producer of branded spirits and liqueurs in Central and Eastern Europe and Italy.

The offer of 377p per share values Stock Spirits at approximately £767m.

The deal represents a premium of 41% to the closing share price of 268p on 11 August 2021, and a premium of 77% to the volume weighted average price of 213p for the 12 month period prior to the commencement of the COVID-19 pandemic.

Commenting on today’s announcement, István Szőke, managing partner at CVC said: “Stock Spirits is a high quality business with strong brands, established market positions and significant growth potential and we are delighted that our proposal has been recommended by the Stock Spirits Directors.

“CVC Funds are a long-standing investor in Central and Eastern Europe and we look forward to working with Stock Spirits management team to help drive its continued development, both by supporting the existing strategy and by investing in inorganic growth opportunities.”

David Maloney, Chairman of Stock Spirits added: “The directors of Stock Spirits are confident in the long-term prospects of the Stock Spirits Group and believe that the Offer reflects our strong position and represents compelling value for Stock Spirits Shareholders.

“Stock Spirits continues to deliver an extremely resilient performance and has an even more loyal and engaged consumer base for its outstanding brands. We believe that CVC’s support for our existing strategy and the investment that it intends to make in order to grow our business means that this Offer will benefit all of Stock Spirits’ stakeholders. We are therefore unanimously recommending the Offer to Stock Spirits Shareholders.”

CVC said it believes that Stock Spirits’ future growth potential will be realised by supporting management’s existing strategy and also investing in strategic inorganic opportunities, with significant investment necessary to help build a scaled and diversified business.

It argued the future development of Stock Spirits will be best served as a private business, operating with an leaner central overhead and rapid access to capital, benefiting from a longer-term investment approach.

“Bidco believes that Stock Spirits will benefit from the support of CVC, a long-standing investor in Central and Eastern Europe. CVC has a proven track record and deep expertise operating in the region’s consumer sector, underpinned by a history of responsible ownership and job creation,” it stated.

The offer is expected to become effective between early December 2021 to early January 2022, subject to shareholder and regulatory approvals.

Stock Spirit shares have leapt 42% on the news to 382.5p this morning.

Morning update

US-based delivery player Gopuff has agreed to buy European fast delivery rival Dija.

Following Gopuff’s recent acquisition of UK-based Fancy, the deal is expected to accelerate the company’s international expansion by establishing an immediate presence in France and Spain and providing further densification in the UK.

Daniel Folkman, Gopuff SVP of business commented: “Combining Dija’s team of industry veterans, extensive infrastructure, and local expertise will complement Gopuff’s proprietary technology and unique customer experience, and advance our ability to scale rapidly as we create a leading platform in Europe.”

“Together, we will continue to innovate and define the Instant Needs economy across Europe and bring the category to more customers in the region.”

Dija was founded in 2020 by Alberto Menolascina and Yusuf Saban and today operates dozens of micro-fulfilment centers across major metropolitan areas including London, Paris, Madrid, Valencia, and more.

Menolascina, Co-Founder & CEO of Dija, said: “For the last eight years, Gopuff has been the market and category leader in the United States. Together, combined with our team’s extensive experience of building and scaling food and delivery companies across Europe, we are perfectly positioned to lead the everyday essentials space in Europe and beyond”

Through the acquisitions of Dija and Fancy, Gopuff plans to operate in three European countries with about 40 micro-fulfilment centers and 200 employees in the region, with additional plans for continued, rapid expansion.

The transaction is anticipated to close within 30 days, subject to customary closing conditions.

Elsewhere, Coca-Cola HBC continued its strong rebound in its second quarter, with (FX neutral) like for like revenue growth of 23.1% in the first half of the year.

That meant FX-neutral net sales revenues closed 4% above pre-pandemic 2019 levels for the period.

Volume growth of 15.9% on a like-for-like basis, was driven by sustained strong performance in the at-home channel, complemented by recovery in out-of-home during Q2.

Sparkling volumes were up 16.2%, with adult sparkling 37% higher and and low/no sugar up 40.3%.

Energy volumes were also up 66.1%, driven by the performance of Monster, Burn and Predator, while the Costa Coffee roll-out continues to “progress well”.

It also saw improvements in FX-neutral revenue per case, which benefited from increased pricing in over 90% of its markets as well as positive category, package and channel mix. FX-neutral revenue per case expanded 6.2%, or by 4.4% excluding pricing taken to offset the Polish sugar tax.

Reported revenues were up 14.7% in the first half to €3.2bn.

However, comparable gross profit margins declined by 70 basis points to 36.6% as raw material costs per case increased by 2.3% and by 8.8% excluding the greater weight of products purchased as finished goods.

In particular, during the year half aluminium and sugar costs increased, albeit it benefited from lower costs of PET resin.

Comparable EBIT increased by 67.8% to €350.3 million, taking comparable EBIT margins up 340 basis points to 10.8%.

CEO Zoran Bogdanovic commented: “We are very pleased with the first half in which we increased value share gains, revenues and profitability as well as making continued progress on our strategic priorities.

“The business gained momentum as the out-of-home channel recovered and growth in at-home continued. In addition, we have delivered growth in the Established and Developing segments alongside the consistent strong performance in the Emerging segment.

“We are encouraged by the strength of the performance, and while conscious of the risks as the COVID-19 pandemic continues to impact our markets, we continue to expect a strong recovery in FX-neutral revenues and now believe that we can achieve a 20-30bps EBIT margin expansion this year.”

Finally, food and nutrition group Glanbia has delivered results ahead of expectations in the first half of 2021 amid strong revenue growth and margin improvements.

Wholly-owned revenues of €2bn in the period were up 20.3% constant currency on prior half year and by 11.2% on a reported basis.

Its core Glanbia Performance Nutrition segment delivered revenue growth of 28.1% constant currency on prior half year (up 19.9% reported).

GPN’s salse increase was driven by a 22.2% increase in volumes, favourable pricing of 5.6% and the positive impact of the recent LevlUp acquisition of 0.3% of revenues.

Glanbia Nutritionals, Nutritional Solutions delivered like-for-like volume growth of 14.9% constant currency on prior half year.

Wholly-owned EBITA pre-exceptional was €159.9 million, up 107.9% constant currency (up 88.1% reported). Total Group profit (pre-exceptional items) for the period was €133.5m, up €63.6m on prior half year.

Previously Glanbia guided full year 2021 adjusted EPS growth to be in the upper end of 6% to 12% on a constant currency basis versus prior year.

However, as a result of the strong performance, Glanbia expects to deliver full year 2021 adjusted EPS growth of 17% to 22% on a constant currency basis versus the prior year.

While it said cost inflation will be a headwind for the group in the second half of the year, in particular in GPN, price increases and margin management are expected to mitigate some of the impact and will also provide the opportunity to increase investment behind brand marketing and NS capabilities, to drive long-term sustainable growth.

Group MD Siobhán Talbot commented: “I am delighted to announce that Glanbia has delivered a very strong performance in the first half of 2021 when compared to the prior year.

“We made strong progress on our strategic agenda in the first half with significant progress on the GPN transformation programme driving revenue and margin growth, the acquisition of a 60% stake in LevlUp, a European gaming nutrition brand, commissioning of a $470 million JV plant in Michigan, the progression of our environmental, social and governance strategy, and the restructure of legacy pension liabilities to de-risk our balance sheet.

“Our compelling belief has always been that consumers increasing focus on health and wellbeing positions Glanbia well for the future, given our portfolio of nutrition brands and ingredient solutions. Our focused actions to drive demand coupled with the consumer response to market reopenings in the first half of 2021 has strengthened our belief that these trends will continue to deliver long-term growth for Glanbia.”

On the markets this morning, the FTSE 100 has edged back 0.2% to 7,202.5pts.

Other than Stock Spirits, early risers include Deliveroo, up 5.4% to 359.3p, Marston’s, up 2% to 86.1p and SSP Group, up 1.3% to 263.8p.

Fallers include McColl’s, down 2.4% to 28.3p, Hotel Chocolat, down 1.6% to 369p and Glanbia, down 0.9% to €14.36. 

Yesterday in the City

The FTSE 100 closed yesterday 0.8% at 7,220.1pts to hit its highest post-Covid level to date.

Deliveroo, however, fell back 6.1% to 341p following recent rises, despite narrowing losses and doubling orders in the first half of the year as concerns over slowing growth hit the shares.

Other fallers included Naked Wines, down 4.9% to 820p, Just Eat Takeaway.com, down 4% to 6,271p, McBride, down 2.3% to 85.4p, McColl’s, down another 1.7% to 29p as it mulls an investor fundraise, and Kerry Group, down 1.7% to €122.45.

The day’s risers included supermarkets Sainsbury’s, up 2.9% to 302.5p, and Tesco, up 1.9% to 238.9p.

Other risers included SSP Group, up 3.8% to 260.5p, Premier Foods, up 2.7% to 114p, PayPoint, up 2.7% to 610p, C&C Group, up 2.2% to 240p, Nichols, up 2.1% to 1,430p, PZ Cussons, up 2% to 252.5p, and DS Smith, up 2% to 442.5p.