Accolade Wines and Punch Taverns have sold their 50% stakes in the drinks distributor Matthew Clark to Conviviality Retail for £100m each after rumours surfaced of the sale in July.
Under the terms of the deal Matthew Clark, the UK’s largest independent drinks distributor, will become wholly-owned by Conviviality Retail – one of the UK’s largest franchised off-licence and convenience chains. Matthew Clark had been a 50-50 joint venture between Accolade Wines and Punch Taverns.
The agreement is subject to certain conditions including the approval by shareholders of both Conviviality and Punch, and is expected to be finalised next month.
Conviviality will fund the deal via a share placing worth £130m at 150p per share and £80m via new debt facilities,
The Bargain Booze owner suspended the trading of its shares on 9 July after enquiries from The Grocer regarding its pursuit of Matthew Clark. The shares began trading again this morning and have leapt 21.3% to 188p so far today.
Conviviality CEO Diana Hunter said the deal ”will accelerate our strategy of expanding our wholesaling expertise into new markets and channels”.
“By operating a delivered wholesale model we can serve a diverse range of customers and build our wine and spirit volumes further while simultaneously strengthening our retail channel,” she added. “The acquisition will create a major player in the UK drinks wholesale market, and we believe that combining the two businesses will give rise to significant potential synergies, which will drive increased returns for Conviviality’s shareholders.”
Matthew Clark reported sales of £811.1m in the year to February 2015 and profits of £17m. Conviviality, which owns the Bargain Booze brand, saw pre-tax profits jump by 4.4% to £9.7m in the year to the end of April, with group sales reaching £364.1m.
As part of the agreement, Accolade said that it has secured a 10-year contract with Matthew Clark, which will ensure that Accolade Wines and Conviviality “remain long-term partners in the drinks trade”.
“We are pleased to have agreed the disposal of our investment in Matthew Clark and at a significant premium to our current book value,” said Punch Taverns chief executive Duncan Garrood.
“The sale of a non-core business will enhance our financial flexibility to pursue our strategic objectives for our core activities.”
Punch Taverns has recently undergone financial restructuring but is still carrying a large amount of debt, leading it to selling off pubs as it seeks to return to a more sustainable business model.
Last year Accolade Wines also restructured its global finances in a $300m (£180m) cross-border recapitalisation deal.
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