Darbyshire denies ‘pre-pack’ claims over HwCg deal

PLB director Peter Darbyshire has insisted the deal which saw his company snaffle up the assets of HwCg was not a result of the infamous ‘pre-pack’ administration process.

Industry speculation was rife that the two companies had struck a deal similar to that which saw Cobra Beer founder Lord Karan Bilimoria buy his company in a joint venture with Molson Coors in May this year .

Under the terms of a “pre-packaged” administration, a sale is already agreed before the appointment of administrators and the deal is completed without the business going on the open market.

Speaking exclusively to the drinks business, Darbyshire insisted that PLB were “not nearly as clever” as that and said such a deal would have been a “a step of financial engineering too far.”

He said: “We have been talking with HwCg for quite a while about this deal and it became clear some time ago that they would have no option but to place the company into administration due to some back-firing investments from its overseas operations.

“Under the terms of the deal, we have taken on all the assets of HwCg including responsibility for its staff.

“Legally we were advised that the cheapest option for us would be to let them go into administration and then cherry-pick the best bits, but we felt that would be immoral of us due to the fact that some people would not be paid and it would be an awful experience for everyone.

“We recognised our responsibility to the HwCg staff and have taken on responsibility for them as a result.”

Darbyshire did confirm, however, that he expects people to leave the company through redundancies and out of their own choice following the announcement of the deal yesterday .

“We are going to consolidate the business, that is for sure,” he said. “There will inevitably be some duplication of roles within the company and this will have to be addressed, while others may not wish to travel from the HwCg offices in Stansted to our premises in East Grinstead every day so they might leave on their own accord.”

Darbyshire did confirm that the combined company would maintain a presence in Stansted for three months while the transition takes place.

“There are roles here in East Grinstead that HwCg employees will be welcome to go for,” he said. “We are being very open with them about what’s going on.”

In terms of the business case behind the deal, Darbyshire reaffirmed his belief that the two companies’ portfolios were extremely complimentary to each other.

HwCg’s strengths lay in Burgundy, Rhone and south west France, whereas PLB’s key interests lie in Chile, Italy and South Africa.

“We will have a much, much stronger offering as a result of this deal,” he said. “HwCg have a great presence in France with labels such as Blason, while we are relatively weak in that region at the moment.

“Additionally HwCg has a strong presence in Chile with brands like Montes, while we enjoy strength in other regions such as California. We are not gung-ho and we know what we are doing. We are not going to let go of any existing business from either company.

“We viewed HwCg as very much our equals in the global market, but who were unfortunately dragged down by some poor investments. It’s a move that should always have happened in my eyes, but it’s just a bit of a shame that HwCg had to go to the wall in order for it to happen.”

Perhaps ominously, Darbyshire expects more of these type of deals to be struck over the coming months as wine companies struggle in the current climate.

“Nobody is under any illusions about margins going back to the way they were,” he said.

“Therefore I expect more of these deals to happen in the near future because companies cannot reduce their fixed overheads overnight.”

Alan Lodge, 20.08.2009