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Bargain Booze and Matthew Clark owner Conviviality (CVR) has agreed to acquire UK wine, spirits and beer distributor and wholesaler Bibendum in a £60m deal.

The acquisition, which includes on-trade through Bibendum Wine and off-trade through Walker & Wodehouse, will increase group turnover by approximately 23% to around £1.4bn.

In its financial year ended 31 March 2016, Bibendum is expected to generate unaudited revenue of £270.5m and unaudited adjusted EBITDA (before exceptional items) of £6.7m.

Conviviality will fund the deal, which has a cash consideration of up to £40m, by raising £32m through the placing of 15.6 million new shares at 205p per share. A further £10m will be drawn down under revised banking facilities with its existing lenders.

Conviviality said the deal strengthens its presence in premium trade sectors and deepens the group’s presence in London and the South East.

CEO Diana Hunter said: “Acquiring Bibendum will not only accelerate our strategy of expanding our wholesaling expertise into new markets and channels, but brings significant expertise to Conviviality in the off-trade wholesale market through the PLB business.

“Bibendum PLB’s wine speciality, particularly in old world and premium wines complements our other businesses and helps us to accelerate our leading position in the independent on-trade market. The team brings significant wine wholesaling expertise and an enviable portfolio of high quality and loyal customers, particularly in London and the South East.

“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. The acquisition of Bibendum PLB accelerates our aim to satisfy all of our customers who want to consume alcoholic beverages at home or out of home, whatever the occasion, serving customers directly via retail outlets and indirectly through hospitality and foodservice channels. We believe the acquisition will give rise to significant potential synergies and increase returns for Conviviality’s shareholders.”

Morning update

Elsewhere it’s a fairly quiet morning as we ease into the week after the May Day bank holiday.

PZ Cussons has announced this morning that John Nicolson joined the board as a non-executive director on 1 May 2016.

Nicolson has held a number of senior positions in the fmcg sector, including regional president of Heineken and executive board director for international markets at Scottish & Newcastle. He is presently the non-executive chairman of A G Barr and a non-executive director of Stocks Spirits Group and North American Breweries.

The FTSE 100 has fallen 0.7% to 6,197.8pts so far this morning - its lowest point for three weeks after weak Chinese manufacturing data.

Conviviality has dropped 1.3% to 210.8p on news of its acqusition and share placing, though it remains more than 5p above the 205p per share placement price.

Tesco (TSCO) has dropped 1.3% this morning to 169.9p and Sainsbury’s (SBRY) is down 0.6% to 287.1p. Ocado has dropped another 2.1% to 289.5p.

The few bright spots this morning include Nichols (NICL), up 3.3% to 1,360p, and Just Eat (JE) has leapt 7.7% yo 413p after posting a £4m annual profit this morning on booming food deliveries.

The week in the City

The listed supermarkets are likely to dominate newsflow this week with trading updates from both Sainsbury’s and Morrisons in the calendar.

Sainsbury’s (SBRY) is first up with its full-year 2015/16 earnings tomorrow, with the supermarket set to unveil a small rise in revenues and a solid profit of around £650m during the year. The market will also be looking for any update on its takeover of Argos-owner Home Retail, which was provisionally agreed with the Home Retail board last month.

Then on Thursday Morrisons (MRW) will issue its first quarter trading update, with the City looking for more evidence of a stabilisation of sales after Morrisons posted its first rise in quarterly sales for four years in the fourth quarter of its 2015/16 financial year.

Elsewhere, on Wednesday Imperial Brands (IMB) will announce its first half results, and ABIn Bev (ABI) will take time out of its efforts to buy SABMiller (SAB) to issue its first quarter sales numbers.

MillerCoors will have a first quarter trading statement later today in the US, while Whole Foods (WFM) will issue its second quarter trading figures tomorrow. Kellogg’s (K) and Kraft Heinz (KHC) release their first quarter sales figures on Thursday.

As the season of AGMs continues, including Ocado on Wednesday, particular attention will be paid to Reckitt Benckiser’s (RB) AGM on Thursday, where shareholders will vote on approving CEO Rakesh Kapoor’s bumper £23m p ay packet having previously protested against Reckitt payouts in the past.

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