What now for the cidermaker C&C and its intention to move into the UK pubs market, now that British MPs have voted to dilute the power of the big brewpub chains to force their bar-running tenants to stick to a “beer-tie”?
Today was to have been the day C&C "put up or shut up", under stock exchange rules, in relation to its mooted €1 billion bid for the Spirit Pub Company. When Spirit earlier this month instead agreed a deal with its rival Greene King, the C&C deadline was scrubbed.
The mood music emanating from people around the C&C camp, however, is that the Irish company is still very much interested in buying a British pub company. That’s brave, given that the market there is now in a state of flux.
Many British publicans lease their establishment from a bigger pub company, which is often attached to particular beer brands or a single brewer. The publican generally gets a cheap rent from the pub company in return for agreeing to purchase beer from it for a set price – a beer-tie deal.
British politicians voted this week to allow the 25,000 or so tenanted pubs to instead buy their beer on the open market, where it is usually cheaper than a beer-tie.
The measure may yet be amended again, but the British pub market was in convulsions following the vote, with horrific dips in the share prices of listed pub companies.
The Greene King-Spirit proposed tie-up is mostly a share deal, and so is vulnerable to share price movements. Analysts seemed confident yesterday, however, that it will survive the vote and the door will remain closed for C&C.
The Irish company has previously said that if it fails to get Spirit, it may go after one of the other listed pubco outfits. The market uncertainty following the vote may spark consolidation, potentially opening up other doors for C&C.
But should it walk through any of them?
Its entire rationale for buying pubs, when it was trying to convince a sceptical market last month of the merits of its strategy, was that it could use the pubs to sell its cider brands. The Commons vote appears to undermine that plan.
It’s C&C’s round next. Same again?
