Matthew Clark acquired by Conviviality Retail

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Matthew Clark is to be sold to Conviviality Retail following a £200m reverse takeover deal agreed last week. Shareholders Punch Taverns plc and Hertford Cellars (owned by Accolade Wines, which in turn is owned by Australian private equity group CHAMP), have sold their shares in Matthew Clark to Conviviality Retail in a deal which expects to complete early next month.

The company,  one of the UK’s largest franchised off-licence and convenience chains, confirmed that it had entered into an agreement to acquire Matthew Clark and its subsidiaries, including Catalyst brands, for an expected total cash consideration of £198.4m, representing an enterprise value of £200m.

Conviviality owns 624 stores. In September 2014 it bought the Wine Rack chain and it purchased convenience retailer GTN for £6m in February. It is funding the reverse takeover by raising £130m through a share placing combined with new debt facilities that will allow it to draw down a further £80m. The new business will have combined sales of more than £1bn say the company.

Matthew Clark has in the region of 17,000 customers, turnover of £811m and profit of £25.3m. It’s new owners Conviviality, by comparison, had a turnover of £364.1m but posted profit before tax and exceptional items of £9.7 million. The deal puts to bed rumours that Tennent’s owners C&C were to buy Matthew Clark.

Duncan Garrood, chief executive of 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.”

The deal is expected to be formerly agreed by Conviviality shareholders at a General Meeting on 24th September as well as by the shareholders of the sellers. If all goes according to plan the deal should be finalised by the October 2nd.

Conviviality said in its report regarding the acquisition, “The acquisition of Matthew Clark represents a continuation of the strategy to leverage Conviviality’s key strengths to enter new markets by providing significant scale in the non-tied, on-trade drinks market, delivering to approximately 17,000 on-trade outlets annually. The on-trade market includes pubs, restaurants and hotels; night venues (e.g. night clubs and casinos); destination leisure venues (e.g. holiday parks and theme parks); and other premises licensed to sell alcoholic drinks for consumption in situ.”

The company has also revealed it is changing its name to Conviviality Plc following the deal.

As part of the agreement Accolade has secured a 10 year contract with Matthew Clark, which will ensure that Accolade Wines and Conviviality remain long-term partners in the drinks trade, and that Accolade’s portfolio of premium, commercial and value New World wines will continue to be available in the on-trade. While Punch said it intends to enter into a 10 year non-exclusive drinks supply contract with Matthew Clark following the stake disposal.

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