C&C Group, home to Tennent’s beer and Bulmers cider, has insisted it has a “clear focus on shareholder value” in the wake of public criticism from a shareholder.
US hedge fund Engine Capital, which owns just under 5% of the Ireland drinks group, wants a review of the business “aimed at a sale”.
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The fund, which said it invested in C&C Group four years ago, argued “structural and self-inflicted issues” had led to the company’s “under-performance and valuation discount”.
Engine Capital’s criticism emerged in a letter to the board made public by the activist investor yesterday (24 June).
Publicly listed C&C Group, which also owns UK drinks distributor Matthew Clark, initially declined to comment but then issued a brief statement.
“The board welcomes feedback from all shareholders and has a clear focus on creating shareholder value,” the company said.
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By GlobalDataC&C Group insisted “the underlying performance of the business has been in line with expectations”. The company added “progress has been made in returning capital to shareholders”.
It said: “Operationally, the key priority is to deliver the substantial actions currently being progressed at pace throughout the business, driving forward both brand and distribution revenue, improving margin, while returning up to €150m ($160.9m) by the end of the fiscal year 2027.”
Earlier this month, C&C Group announced CEO Patrick McMahon had resigned “with immediate effect” as it reported financial mistakes made during his time as CFO.
The company said it had reviewed its inventory and balance-sheet reconciliations after its board was notified of “discrepancies” earlier this year.
The news came alongside the publication of C&C Group’s unaudited financial results for its 2023/2024 financial year, which included lower revenue and pre-tax profits.
The Dublin-headquartered company’s performance in its 2022/2023 fiscal year was impacted by a botched software upgrade at its Matthew Clark and Bibendum businesses.
The problems stemmed from the roll-out of new ERP software, with C&C Group admitting it had seen “significant challenges” with the implementation of the systems. Alongside the disclosure of the problems, made in May 2023, C&C Group also then announced the departure of CEO David Forde after three years at the helm. He was succeeded by McMahon.
In Engine Capital’s letter to the C&C Group board, Arnaud Ajdler, the investor’s managing member, said: “C&C has been a perennial underperformer and has failed to create shareholder value over any relevant measurable period.
“In our view, a sale could deliver returns far superior to the standalone value of the company, especially considering the time value of money and the execution risks of attempting to reverse self-inflicted issues.”
