Does Bulmers' prize asset make it a prime takeover target? Rosie Davenport reports
Cross-dressing is not a habit usually associated with cider lovers. But the image of Johnny Vaughan, decked out in a blonde wig and fashioned to resemble supermodel- turned-actress Jerry Hall propping up a bar, certainly turned drinkers onto Strongbow.
The TV presenter and comedian appeared over three years in a campaign that absorbed the lion's share of an annual £11m marketing package and helped to maintain Bulmers' position as the manufacturer of a top 10 selling alcoholic drink.
Up there in the superleague of brands such as Stella Artois and Carling, rivals are acutely aware of the power Strongbow commands. Unlike its peers, the cider has proved its worth by succeeding in a declining market.
But Bulmers' first public admission that a sale might be the only way out of its well-charted woes partly caused by overspending on promotion has struck a chord with companies which would vie to take on Strongbow.
"Bulmers has got what, in our language, is a power brand," says Keith Hogg, MD at Scottish Courage Brands. "Any supplier of alcoholic drinks would be excited by the challenge of managing and developing Strongbow."
In fact, buyers frequently salute it as one of the most important brands in the drinks fixture, he adds.
To some extent Strongbow's solid brand image has bolstered Bulmers' position in the City, but analysts do not know if that would be sufficient to compensate potential buyers for the company's other problems.
One analyst explains: "Strongbow is a very attractive brand with longevity. It could be rolled out globally with the right support. But the City is looking for companies with strong cash flows. A potential buyer would have to balance the threat of a falling stock market and the fact that the business already has high levels of borrowing."
He adds: "Most people in the City realised last year that Bulmers would have to sell off some assets and that it was vulnerable to a takeover bid. At the end of the day it needs cash."
Former Whitbread boss Miles Templeman, who took over the Bulmers' hot seat in December, says a sell-off is "one of several strategic options available to the company".
Bulmers insists the For Sale sign would only be put up if the company defaulted on refinancing arrangements put in place last November.
But given the fact that Bulmers has told the City it could breach covenants within the refinancing terms by April and, more crucially, could run out of working capital in 12 months, a sale cannot be ruled out.
Bulmers' PR manager, George Thomas, says the company is confident its turnaround plan, which is dependent on all its cider brands, including Woodpecker and Scrumpy Jack, and the UK distribution rights it owns to San Miguel and Amstel beers, will save it from selling its crown jewel, Strongbow.
"The Bulmer family retains a 50% share of the business and it wants to remain an independent company," says Thomas.
"There is an extreme urgency to reduce debt and the directors are doing this in a number of ways, including the sale of the Australian and New Zealand businesses."
But the proposed £22.5m deal with Foster's to sell off the Australian side of its business which shareholders have yet to approve would not be enough to balance Bulmers' net debt of £107m.
Templeman has indicated that the sale of Beer Seller, its on-trade distribution arm, could provide much needed capital, while a rights issue from Bulmers is also being considered. One potential buyer for Beer Seller says Bulmers would be unlikely to get back the £32m it paid for the distribution business.
That remains a secondary issue holding onto Strongbow is the priority as Bulmers faces up to its toughest period yet.
{{ANALYSIS }}
Cross-dressing is not a habit usually associated with cider lovers. But the image of Johnny Vaughan, decked out in a blonde wig and fashioned to resemble supermodel- turned-actress Jerry Hall propping up a bar, certainly turned drinkers onto Strongbow.
The TV presenter and comedian appeared over three years in a campaign that absorbed the lion's share of an annual £11m marketing package and helped to maintain Bulmers' position as the manufacturer of a top 10 selling alcoholic drink.
Up there in the superleague of brands such as Stella Artois and Carling, rivals are acutely aware of the power Strongbow commands. Unlike its peers, the cider has proved its worth by succeeding in a declining market.
But Bulmers' first public admission that a sale might be the only way out of its well-charted woes partly caused by overspending on promotion has struck a chord with companies which would vie to take on Strongbow.
"Bulmers has got what, in our language, is a power brand," says Keith Hogg, MD at Scottish Courage Brands. "Any supplier of alcoholic drinks would be excited by the challenge of managing and developing Strongbow."
In fact, buyers frequently salute it as one of the most important brands in the drinks fixture, he adds.
To some extent Strongbow's solid brand image has bolstered Bulmers' position in the City, but analysts do not know if that would be sufficient to compensate potential buyers for the company's other problems.
One analyst explains: "Strongbow is a very attractive brand with longevity. It could be rolled out globally with the right support. But the City is looking for companies with strong cash flows. A potential buyer would have to balance the threat of a falling stock market and the fact that the business already has high levels of borrowing."
He adds: "Most people in the City realised last year that Bulmers would have to sell off some assets and that it was vulnerable to a takeover bid. At the end of the day it needs cash."
Former Whitbread boss Miles Templeman, who took over the Bulmers' hot seat in December, says a sell-off is "one of several strategic options available to the company".
Bulmers insists the For Sale sign would only be put up if the company defaulted on refinancing arrangements put in place last November.
But given the fact that Bulmers has told the City it could breach covenants within the refinancing terms by April and, more crucially, could run out of working capital in 12 months, a sale cannot be ruled out.
Bulmers' PR manager, George Thomas, says the company is confident its turnaround plan, which is dependent on all its cider brands, including Woodpecker and Scrumpy Jack, and the UK distribution rights it owns to San Miguel and Amstel beers, will save it from selling its crown jewel, Strongbow.
"The Bulmer family retains a 50% share of the business and it wants to remain an independent company," says Thomas.
"There is an extreme urgency to reduce debt and the directors are doing this in a number of ways, including the sale of the Australian and New Zealand businesses."
But the proposed £22.5m deal with Foster's to sell off the Australian side of its business which shareholders have yet to approve would not be enough to balance Bulmers' net debt of £107m.
Templeman has indicated that the sale of Beer Seller, its on-trade distribution arm, could provide much needed capital, while a rights issue from Bulmers is also being considered. One potential buyer for Beer Seller says Bulmers would be unlikely to get back the £32m it paid for the distribution business.
That remains a secondary issue holding onto Strongbow is the priority as Bulmers faces up to its toughest period yet.
{{ANALYSIS }}
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