C&C Group, home to Tennent’s beer and Bulmers cider, has agreed to work “constructively” with Engine Capital following the shareholder's criticism of the group.
US hedge fund Engine Capital, which owns just under 5% of the Ireland drinks group, had requested that C&C conduct a review of the business “aimed at a sale”.
Engine Capital also nominated two people for C&C director roles, which will be voted for at its AGM on 15 August. Following the cooperation agreement with C&C, Engine Capital has withdrawn its proposed nominees.
In return, C&C will “commence a process” to appoint one non-executive director to the board that has “capital expertise” from an Engine Capital-created shortlist.
In a statement to investors, C&C said: “Engine has confirmed it will vote in support of all resolutions proposed at the AGM in line with the board's recommendations.”
Engine Capital’s criticism emerged in a letter to the board made public by the activist investor last month. 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”.
Last month, C&C insisted it has a “clear focus on shareholder value” in the wake of public criticism from a shareholder.
C&C Group also announced last month that 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.
C&C’s portfolio includes beer brands Tennent’s beer and Five Lamps and cider brands Orchard Pig and Bulmers Irish cider, known internationally as Magners. The group also acquired a wine-distribution arm in 2018, which includes UK wholesaler Matthew Clark and fine-wine merchant Bibendum.
For the opening six months of this fiscal year, C&C Group returned an operating profit of €30.5m ($33.3m), down 42.8% on the previous year. Net revenue fell 1.2% to €872.5m while adjusted EBITDA fell 33.5% to €45.9m.
