LONDON (Alliance News) - Alcohol and soft drinks wholesaler Conviviality PLC on Tuesday said its subsidiary Conviviality Brands Ltd is buying wine, spirit and beer distributor Bibendum PLB (Topco) Ltd for GBP60 million.
Conviviality will fund up to GBP40 million of the cash consideration through the placing of 15.6 million shares at 205 pence each, to raise proceeds of GBP32 million, with a further GBP10 million term loan to be drawn down under its revised bank facilities. Conviviality shares opened down 0.8% at 211.75p.
Conviviality has also agreed the extension of Bibendum's invoice discounting facilities of up to GBP30 million, of which GBP20 million was anticipated to be drawn down on April 29.
The company said the acquisition will increase its turnover by around 23%, making combined annual sales of over GBP1.4 billion. The acquisition is expected to be earnings enhancing in the current financial year ending April 2017.
It will also strengthen the group's skills and capabilities, specifically in customer insights, producer relationships and old world and premium wines, as well as strengthening the group in premium trade sectors and deepening its presence in London and the south-east, Conviviality said.
In the financial year ended March 31, Bibendum is expected to generate a revenue of GBP270.5 million and adjusted earnings before interest, tax, depreciation and amortisation of GBP6.7 million.
Conviviality added that it has received irrevocable undertakings and statements of intent to vote in favour of the acquisition in respect of 54.6 million shares, representing 35% of its issued share capital.
"We are pleased to be acquiring Bibendum PLB as the business will not only accelerate our strategy of expanding our wholesaling expertise into new markets and channels, but brings significant expertise to Conviviality in the off-trade wholesale market through the PLB business," Chief Executive Diana Hunter said in a statement.
"We believe the acquisition will give rise to significant potential synergies and increase returns for Conviviality's shareholders," she added.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.