The fizz has well and truly gone out of the market taking with it the flotation of C&C, the makers of Club Orange amongst other sparkling beverages. The company's decision to pull its stock market debut at the eleventh hour makes it the latest Irish victim of the uncertainty that has gripped the international markets since the start of the year. There were other consequences in evidence yesterday with 250 jobs lost at Flextronic in Limerick and further bad news is expected this morning from Hewlett Packard.
The initial focus of the market's concerns was the telecommunications and technology sectors which have been in the doldrums for well over a year. Worries about the quality of the stated accounts of companies such as Xerox and Worldcom have been the proximate causes of the erratic stock-market behaviour we have seen in recent weeks, but the contagion has now spread throughout the market.
Some commentators have gone so far as to suggest that the fundamental rationale for the stock market as an efficient mechanism for channelling savings into investment has been fatally undermined. It is too early to pass such a judgment but the reality is that confidence in the system has been badly shaken and investors are nervous.
To have persevered with the flotation would have done considerable harm to the company. C&C still has the option of returning to the market when conditions are more suitable. The effect of a botched flotation would have had a long-term impact and investors who were hurt in the process would have taken a long time to forgive the company.
Mr Tony O'Brien and his fellow directors are to be commended for taking what was a brave decision. Mr O'Brien has missed out on a €8.8 million pay day. He and the other senior managers will now have to wait before they can enjoy the fruit of their labours.
The reality is that they had little choice. The feedback from prospective investors over the past few days would have made their minds up for them. What is worrying is that investors continued to be wary of the flotation despite C&C being held up as the sort of stock that could best weather the storms currently buffeting the market. Firmly rooted in the old economy, it had a number of very well-known consumer brands, although its focus was very much on the Irish market.
The decision to cancel its flotation is not automatically a disaster for C&C. The company's management is confident that it can prosper without the funds that were to be raised. But it may be as long as 12 months before the conditions are judged suitable for the company to have another tilt at a public listing. It would be surprising if, in the interim, the company and the investment house that owns it, do not look at alternative ways of realising their investment, such as a trade sale.