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Activist investor Engine Capital builds stake in cider manufacturer C&C Group

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Activist hedge fund firm Engine Capital has acquired a stake of just under 5% in C&C Group, the FTSE 250-listed manufacturer of Magners Irish Cider, according to a report by Bloomberg. 

According to a Bloomberg source, the hedge fund believes C&C is currently undervalued and is urging the company’s board to undertake a strategic review process aimed at exploring a potential sale. Engine Capital views C&C as an attractive target for acquisition by either industry players or private equity firms.  

Earlier this month, shares of C&C plummeted by as much as 13%, marking the sharpest decline in over a year. The decline followed the company’s announcement of a €150m ($160m) impairment charge primarily related to the Magners brand, coupled with the departure of CEO Patrick McMahon. Chairman Ralph Findlay has since stepped in as interim CEO. 

C&C’s stock has fallen approximately 53% since it delisted from Euronext Dublin in 2019. As of June 21st, the stock closed at 159 pence in London, giving the company a market capitalisation of about £615m ($778m). 

Engine Capital believes that C&C, currently trading at approximately 7 times its normalized EBITDA, is undervalued relative to the strategic value of its assets and is priced at a discount compared to multiples seen in private markets transactions. 

The alcoholic beverage industry in the UK and Ireland has seen consolidation in recent years. Danish brewer Carlsberg formed a joint venture with Marston’s in 2020, while Japanese rival Asahi acquired Fuller, Smith & Turner’s brewing business in 2019. Most recently, Britvic, the owner of the J2O soft drinks brand, disclosed that it rejected a £3.1bn unsolicited takeover offer from Carlsberg. 

In addition to Magners, C&C owns Italian sparkling wine maker Ferrari Trento and Scottish brewer Tennent’s. 

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