Punch disposes of 50% stake in wholesaler business for £100m
STAFFORDSHIRE pubco Punch Taverns is to sell off its 50% stake in a drinks wholesalers and distributor in a deal worth more than £100m.
The Burton-upon-Trent group has agreed to its shareholding in Matthew Clark to Conviviality Brands, a wholly-owned subsidiary of Conviviality Retail.
The deal is valued at £100.7m and includes a dividend of £1.5m that will be paid by Matthew Clark to subsidiary Punch Finco prior to completion.
The Matthew Clark business is a 50/50 joint venture between Punch and Hertford Cellars, which is a subsidiary of Accolade Wines. As part of the same transaction, Hertford Cellars will also be disposing of its 50% shareholding in Matthew Clark to Conviviality Brands, so that following completion Matthew Clark will be wholly owned by Conviviality Brands.
The disposal, because of its size in relation to the company, is conditional on the approval of Punch shareholders but provided they agreed to the deal, the transaction is expected to complete on October 2.
Details of the proposal are being dispatched to shareholders with a recommendation to approve the disposal.
Bristol-based Matthew Clark is a leading drinks wholesaler and distributor, delivering to approximately 17,000 on-trade premises across the UK.
The company reported consolidated revenue of £811.2m and pre-tax profit £17m for its last financial year, ended February 28, 2015.
Punch’s 50% interest in the Matthew Clark joint venture, which it acquired in April 2007, is held by its wholly-owned subsidiary Punch Finco. The group equity accounts for the Matthew Clark joint venture. The unaudited value of the investment on the group’s balance sheet as at August 22, 2015 was £52.3m.
The net cash proceeds of the disposal, likely to amount to £98.7m after costs and expenses are expected to be used to support Punch’s strategic objectives, maintain an appropriate level of net debt and/or for general corporate purposes.
The unaudited share of post-tax profit attributable to the group’s 50% shareholding in Matthew Clark for the financial year ended August 22, 2015 was £7.8m (FY14 audited: £6.2m).
Duncan Garrood, CEO, Punch Taverns, said: “We are pleased to have agreed the disposal of our investment in Matthew Clark and at a significant premium to our current book value. The sale of a non-core business will enhance our financial flexibility to pursue our strategic objectives for our core activities.
“At the same time, we will enter into a 10-year drinks supply agreement with Matthew Clark for the supply of wines and spirits into the Punch estate.”
Broker and adviser Zeus Capital led the deal for Conviviality. Its team was led by Tremayne Ducker and Nick Cowles.
In an accompanying trading update, Punch reiterated its intention of reporting underlying EBITDA of between £193m and £200m.
It also said that following the sale of 150 of its non-core pubs to NewRiver River for £53.5m – announced last month – its portfolio comprised approximately 2,900 pubs, with 550 non-core properties.
