M&A

30 November, 2009

UPDATE 2-C&C to buy Constellation's UK cider brands

* To pay 45 mln stg cash, raise 60 mln new bank facility

* Purchase to give C&C a third of the UK cider market

* Deal not conditional on clearance by UK regulator

* Expects 3 mln stg in synergies by end-2012/13

* C&C shares up 3.1 pct

(Adds background on UK cider market, analyst comment)

LONDON, Nov 30 (Reuters) - Irish drinks group C&C (GCC.I) said it agreed to buy all the UK cider assets of Constellation Brands (STZ.N) for 45 million pounds ($74 million) in cash, a deal seen giving it a third of the UK cider market.

The Irish drinks group, which owns Magners cider, said the deal - which includes the Blackthorn, Olde English and Gaymers brands - is not conditional on clearance by the UK Office of Fair Trading, but will be subject to review by the regulator.

The acquisition will double C&C's cider volumes to about 3 million hectolitres. The UK cider market is the world's largest by value with total volume of about 9 million hectolitres.

"The deal strengthens C&C's UK market position in cider, completing its portfolio (Heineken is no longer a prerequisite for cider in the UK on-trade channel) and brings scale to the UK business," said Davy Research.

C&C operates the Bulmers brand in the Republic of Ireland, while Heineken NV (HEIN.AS), owner of Strongbow cider, operates the Bulmers brand in the UK.

C&C (GCC.L) will finance the deal via a new 60 million pound bank facility.

Shares in C&C were up 3.1 percent at 2.66 euros at 0923 GMT.

New York-based Constellation said it sold the assets to allow it to focus on its higher growth, higher margin wine, beer and spirit brands. It will use the proceeds to reduce borrowings.

C&C expects the transaction to complete by mid-January and to be immediately earnings accretive.

It expects to see about 3 million pounds of synergies by the end of the 2012/13 financial year, and cash costs for achieving these synergies of about 1.5 million pounds to be incurred in the 2010/11 financial year.

C&C agreed to buy the Scottish and Irish businesses of Anheuser-Busch InBev (ABI.BR) in August, giving it Scotland's top lager Tennent's. [ID:nLR604911] (Reporting by Julie Crust; editing by John Stonestreet and Hans Peters) ($1=.6105 Pound) ((julie.crust@thomsonreuters.com; +44 207 542 3847))

Source: http://www.reuters.com