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News
Reports suggest that Molson Coors is in talks with Conviviality
According to The Times, American brewing giant Molson Coors is understood to be in talks with Conviviality’s administrators, while investors in the UK wholesaler are allegedly considering legal action against the company’s board, claiming they were misled over the health of its finances.
The owner of Carling, Coors Light and Cobra beer brands is allegedly in talks to buy all or part of Conviviality Retail, according to an article published in The Times at the weekend.
The paper also reported that C&C Group, the owners of Magners Cider and Tennent’s Lager, is also in discussion with the company.
In addition, The Times also stated that other companies expressing an interest in Conviviality include the world’s biggest brewer AB InBev and private equity firm Endless, which is allegedly working with Steve Thomson, the former managing director of Matthew Clark, itself under the Conviviality umbrella.
Conviviality has not confirmed that it has appointed administrators, but on 29 March, it did file notice of its intention to do so within 10 business days “unless circumstances change”. It has not said whether this has yet happened.
In an article published today, The Times also stated that investors in Conviviality are considering legal action against the drinks company’s board after claims that they were misled over the health of the wholesaler’s finances.
According to the paper, a particular bone of contention is Conviviality’s decision to raise £30 million to fund its acquisition of 127 Central Convenience stores in December 2017. It placed 8,000,000 new ordinary shares on the market at a price of 375 pence to raise the amount.
It is claimed that investors are questioning when exactly Conviviality’s board became aware of its financial problems.
Conviviality issued its first profit warning on 8 March in which it declared that a “material error” in its financial forecasts had meant that its profit would be £5.2 million less than expected.
This was followed by an update on 14 March in which it added that it was facing a £30 million tax bill and had suspended trading in its shares.
On 21 March, it announced it would be attempting to raise £125m to pay off debts and continue trading, but on 28 March, Conviviality reported that it had failed to reach this equity target.
It suggested parts of the business may now have to be sold off, and on 29 March, filed notice of its intention to appoint administrators within 10 business days “unless circumstances change”.
Both the C&C Group and Molson Coors have declined to comment on the reports.
I really hope one of these potential buyers is successful for the sake of the staff. I also hope the directors walk away with nothing and even are the subject of a stock exchange investigation for how they maanged in a matter of weeks to turn a supposedly strong business into a bankrupt one and owe HMRC £30 million as well. I am sure the shareholders will be interested in the answers!
Well written Charles! Your most important word was “supposedly” Smoke and mirrors has always been their game.
Hi Mike, I hope you are keeping well. Yes there is a great deal of explaining to be done and I am sure the shareholders will be waiting with interest for it!. The fact that they could not raise the £125 m because the recovery plan was not ‘credible’ says a lot! It seems to be the board were either in ignorance of the underlying parlous state of the business or they deliberately misled the market. Either way they are damned! How can any properly run business overlook £30 m owed to the taxman?????
Think any potential buyer should know that 82% of bargain booze franchisees are leaving or have left, bargain booze as you know it is over.
Sounds as if from what you say BB is a goner anyway but even if not with so much retail competition did it really have a future. The wholesale business is fundamental sound and was run successfully and profitably (or at least the MC side) until Conviviality got their hands on it and failed to understand what they had bought and by all accounts got rid of the key people who did know how to run it!
David
82% of franchisees are having to consider leaving as a matter of survival. I am one of them but would much rather Bargain Booze was given a lifeline. It’s been my life for over ten years now and I truly hope it survives.
I think Diana Hunter should be held accountable for her part in this almighty crash…but no she has stepped down…I hope she is investigated and her £944k a year salary is given to the staff who are the innocents in all this…shameful !!!!
Well said Frances. I trust the Porsche Cayenne ‘mobile office’ will be amongst those assets recouped for the new business owners!
WSTA Chairman Dan Jago said Diana Hunter was ‘a force for good’ – I wonder if the shareholders, staff, suppliers and customers would agree?!
As a retailer, within a stones throw of a Bargain Booze shop, I would have to seriously consider the implications of one of the brand owners buying the group. Why should I support a brand that directly owns a competitor?