Conviviality buys Matthew Clark

Conviviality has reached an agreement to buy Matthew Clark, the UK’s largest independent drinks distributor, in a deal worth £200 million.

Diana Hunter, chief executive of Conviviality

Matthew Clark is jointly owned by Hertford Cellars, a subsidiary of Accolade Wines, and Punch Taverns, both of which have agreed to sell their 50% stake in the business to Conviviality Retail Plc for around £100 million a piece.

Confirming the sale of its shares this morning, Accolade Wines said in a statement: “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.”

The two companies began talks over a proposed sale in July 2015, with shares in Conviviality Retail temporarily suspended.

The group is one of the UK’s largest off-licence chains with 575 franchisee-operated stores in the UK, which includes Bargain Booze, Bargain Booze Select Convenience and Thorougoods.

Diana Hunter, chief executive of Conviviality, said: “Matthew Clark has a leading position in the independent on-trade market, complementing Conviviality’s position in the off-trade, and the team bring significant on-trade wholesaling expertise and an unrivalled portfolio of high quality and loyal customers.

“By operating a delivered wholesale model we can serve a diverse range of customers and build our wine and spirit volumes further while simultaneously strengthening our retail channel. The acquisition will create a major player in the UK drinks wholesale market, and we believe that combining the two businesses will give rise to significant potential synergies, which will drive increased returns for Conviviality’s shareholders.”

The deal, which is classed as a reverse takeover due to Conviviality Retail’s smaller market value, is being funded by a £130m share placing with a further £80m drawdown of the group’s debt facilities.

The acquisition will create a drinks wholesaler with combined annual sales of over £1.1bn.

Duncan Garrood, chief executive of Punch Taverns, added: “The sale of a non-core business will enhance our financial flexibility to pursue our strategic objectives for our core activities. At the same time, we will enter into a 10 year drinks supply agreement with Matthew Clark for the supply of wines and spirits into the Punch estate.

The deal is subject to shareholder approval and is expected to be finalised in October. Investec acted as Joint Bookrunner in relation to the transaction, alongside Zeus Capital, which also acted as financial adviser.