Conviviality Retail jumps on Matthew Clark acquisition

(ShareCast News) - Shares in Conviviality Retail jumped over 20% early on Tuesday, after the off-licence and convenience store chain announced a deal to acquire drinks supplier Matthew Clark (Holdings) for £200m.Conviviality said it expects the deal to be concluded early next month, adding it will conduct a placing, comprising of 86.6m new shares at 150p each, to raise approximately £130.0m, with the remaining funds provided by the company's new-debt facility.Matthew Clark, which posted revenue of £811.2m in the 12 months to 28 February, is a 50/50 joint venture between Punch Taverns and Accolade Wines-owned Hertford Cellars.The London-listed group said it will pay £100.7m to Punch for its 50% stake in Matthew Clark, with the remaining balance being paid for the other 50% stake held by Hertford Cellars.Conviviality said the acquisition will "create a major UK drinks wholesaler with combined annual sales of over £1.10bn, adding it expects the deal to be "earnings enhancing" within the first year of ownership."We are pleased to have reached agreement on the acquisition of Matthew Clark as this will accelerate our strategy of expanding our wholesaling expertise into new markets and channels," said Diana Hunter, chief executive of Conviviality.Punch Taverns said it expects to make approximately £98.7m in net cash proceeds, which will improve the company's "financial flexibility to pursue its strategic objectives", adding it has agreed to enter a 10 year non-exclusive drinks supply contract with Matthew Clark Wholesale upon completion of the deal.The agreement will see the latter supply selected wines and spirits drinks products to Punch Taverns at pre-agreed prices."We are pleased to have agreed the disposal of our investment in Matthew Clark and at a significant premium to our current book value," said Punch chief executive Duncan Garood."The sale of a non-core business will enhance our financial flexibility to pursue our strategic objectives for our core activities."Conviviality shares were up 20.90% to 187.40p at 0944 BST on Tuesday.