Bargain Booze owner Conviviality Retail has agreed to acquire drinks supplier Matthew Clark for an enterprise value of £200m.

  • The £200m deal constitutes a reverse takeover
  • Conviviality will raise £130m from a share placing and £80m from a new debt facility
  • The new company will have combined revenues of £1.1bn

As Conviviality Retail is a smaller company, the deal constitutes a reverse takeover and is conditional on obtaining shareholder approval on September 24. The acquisition will be financed by a share placing that aims to raise gross proceeds of £130m, while an additional £80m will be drawn from a new debt facility.

The placing of shares will be comprised of the issue of 86.7 million new ordinary shares at a price of 150p per share. Once the acquisition completes, it will create a company with combined annual sales of over £1.1bn.

Matthew Clark, which is half-owned by pub operator Punch Taverns, made a £2.5m profit on sales of £811.2m for the year ending February 28 and is the biggest supplier to UK pubs. Conviviality Retail claims the enlarged business would be independent of major drinks brands, which would enable it to supply “an unrestricted selection of products to customers who value breadth of range”.

Buying synergies

It is also expected that there will be significant synergies from the combination of the two businesses, including within buying, distribution, organisational efficiencies and additional revenue generation.

Conviviality Retail chief executive Diana Hunter said: “This will accelerate our strategy of expanding our wholesaling expertise into new markets and channels.

“Matthew Clark has a leading position in the independent on-trade market, complementing Conviviality’s position in the off-trade, and the team bring significant on-trade wholesaling expertise and an unrivalled portfolio of high-quality and loyal customers.

“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.”

Zeus Capital and Investec advised on the deal.