Conviviality Plc (AIM: CVR), the UK’s leading independent alcohol wholesaler serving consumers through the on-trade and through its owned and franchise retail estate, CVR has told DirectorsTalk that its wholly owned subsidiary, Conviviality Brands Limited has conditionally agreed to acquire Bibendum PLB (Topco) Limited , one of the largest wine, spirit and beer distributors and wholesalers to the UK on-trade and off-trade markets, for an enterprise value of £60.0 million.
The Company proposes to fund the cash consideration payable under the Acquisition of up to £40.0 million through a placing of 15,609,757 new ordinary shares of £0.0002 each in the capital of the Company, at a price of 205 pence per Placing Share to raise gross proceeds of £32.0 million, with a further £10.0 million term loan to be drawn down under the Conviviality group’s revised bank facilities with its existing lenders. The Placing has not been underwritten. Conviviality has also agreed the extension of Bibendum PLB’s invoice discounting facilities of up to £30.0 million of which £20.0 million was anticipated to be drawn down as at 29 April 2016.
Highlights
· Bibendum PLB provides Conviviality and its subsidiaries (“Group”) with a range of complementary businesses serving:
o the on-trade through Bibendum Wine
o the off-trade through Walker & Wodehouse
o agencies through PLB and Instil Drinks Co.
o events through the Wondering Wine Company
· Increases the Group’s turnover by approximately 23 per cent. with combined annual sales of over £1.4 billion*
· Together, the Acquisition and the Placing are expected to be earnings enhancing** in the current financial year ending April 2017
· Strengthens the Group’s skills and capabilities, specifically in customer insights, producer relationships and old world and premium wines
· Bibendum PLB, through its expertise in wine, strengthens the Group particularly in premium trade sectors and deepens the Group’s presence in London and the South East
· Expected to enable acceleration of the Group’s strategy to satisfy all of its customers who want to consume alcoholic beverages at home or out of home, whatever the occasion, serving customers directly via retail outlets and indirectly through hospitality and foodservice channels
· In its financial year ended 31 March 2016, Bibendum PLB is expected to generate unaudited revenue of £270.5 million and unaudited adjusted EBITDA (before exceptional items) of £6.665 million*
· The Company’s directors believe that potential exists for significant cost synergies to be realised from the combination of Conviviality and Bibendum PLB, particularly in relation to organisational, buying and distribution with scope to also generate incremental revenue across the two businesses
· The Acquisition and associated expenses are expected to be financed via the Placing and the Revised Facilities
· The Placing comprises the issue of 15,609,757 new ordinary shares of £0.0002 each (“Ordinary Shares”) at a price of 205 pence per share, representing a 4.0 per cent. discount to the closing middle market price of 213.5 pence per share on 29 April 2016, being the last practicable date prior to the date of this announcement
· Completion of the Acquisition is conditional, inter alia, on admission of the Placing Shares to trading on AIM (“Admission”). Admission of the Placing Shares is conditional upon, inter alia, shareholders of Conviviality (“Shareholders”) passing resolutions to authorise the directors to allot the Placing Shares and disapplication of pre-emption rights in respect of the Placing Shares (“Resolutions”) which are to be proposed at a general meeting of the Company to be held on 19 May 2016 (“General Meeting”) and Admission taking place on 20 May 2016
· Conviviality has secured irrevocable commitments to vote in favour of the Resolutions to be proposed at the General Meeting in respect of 38,896,745 Ordinary Shares, representing 25.1 per cent. of the Company’s issued share capital as at 29 April 2016, being the latest practicable date prior to publication of this announcement. In addition, Shareholders holding 15,743,385 Ordinary Shares, amounting to 10.1 per cent. of the Issued Share Capital, have provided statements of intent to vote in favour of the Resolutions. In aggregate the Company has received irrevocable undertakings and statements of intent to vote in favour of the Resolutions in respect of 54,640,130 Shares, amounting to 35.2 per cent. of the Issued Share Capital
* Turnover for the Group (excluding Matthew Clark) is for the 12 months to 26 April 2015. Turnover for Matthew Clark relates to the 12 months to 28 February 2015. Financial Information for Bibendum PLB is derived from Bibendum PLB’s unaudited management accounts for the 10 months to 28 February 2016 and an estimate of Bibendum PLB’s unaudited management accounts for March 2016
** Excluding one‑off transaction costs and integration costs
Diana Hunter, Chief Executive Officer of Conviviality, said: “We are pleased to be acquiring Bibendum PLB as the business will not only accelerate our strategy of expanding our wholesaling expertise into new markets and channels, but brings significant expertise to Conviviality in the off-trade wholesale market through the PLB business. Bibendum PLB’s wine speciality, particularly in old world and premium wines complements our other businesses and helps us to accelerate our leading position in the independent on-trade market. The team brings significant wine wholesaling expertise and an enviable portfolio of high quality and loyal customers, particularly in London and the South East.
“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 of Bibendum PLB accelerates our aim to satisfy all of our customers who want to consume alcoholic beverages at home or out of home, whatever the occasion, serving customers directly via retail outlets and indirectly through hospitality and foodservice channels. We believe the acquisition will give rise to significant potential synergies and increase returns for Conviviality’s shareholders.”
A circular containing a notice of General Meeting of the Company, convened for 10.00 a.m. on 19 May 2016, will today be sent to Shareholders, outlining the terms of the Acquisition and the Placing and convening the General Meeting at which the Resolutions will be tabled to authorise the Directors to allot the Placing Shares in connection with the Placing and disapplication of pre-emption rights in respect of the Placing Shares. A copy of the Circular will also be made available on the Company’s website, www.conviviality.co.uk.
