C&C unable to rule out job losses after Gaymer's purchase

Stephen Glancey, chief operating officer of C&C Group, owner of Magners said he is unable to rule-out job losses as the result of its purchase of rival cider maker, Gaymer Cider Company.

Speaking at a press conference in Dublin, following the £45m acquistion, Glancey said that while a consultation was ongoing, the aim was to continue to develop both Magners and Gaymer's brands, but cut costs by reducing funds spent on distribution.

Glancey added the move to acquire the Shepton Mallet-based cider maker from Constellation Brands was driven by a need to strengthen the business through a portfolio of products covering all sectors of the market.

Eighty per cent of Gaymers sales are to the off-trade. Sales of Magners fell two per cent in the six months to August 31, 2009.

The deal will double C&C's cider production to three million hectolitres and make it the second biggest cider manufacturer in England, Ireland and Northern Ireland.

"It consolidates our position in Great Britain which makes us a very strong player," said Glancey.

"To win, one brand is not enough. You need a portfolio of brands to win in any market place. We have over the last 12 months in the acquisition of Tennents and Gaymers developed that portfolio strength.

"We want to invest in the business and the brands. We don't see this as being bad news for people in Shepton Mallet."

It is estimated that revenue and cost synergies will total £3m by the financial year ending 2013.

Around £1.3m will come from optimising sourcing, improving efficiencies and reducing overlap.

A further £1.7m will be saved by selling a broader range of products in particular draught Blackthorn, through the distribution network of Tennent's which it bought in August.

Kenny Neison, C&C strategy director said: "The synergised Pro-Forma EBITDA for the acquired business will be around £11m per annum, making the acquisition very attractive from an economic return perspective. We expect the business to deliver strong growth of over 40 per cent resulting in an EBITDA of £8m for 2009/10."

The deal, which is set to complete in January is not subject to clearance by the UK Office of Fair Trading (OFT) but is subject to an OFT review.

C&C is still awaiting a final decision from the OFT on the Tennent's acquisition.