Matthew Clark buys Grants: Group funds move into drinks wholesaling through pounds 30m rights issue

Click to follow
MATTHEW Clark is doubling its turnover through another acquisitive push into drinks wholesaling, this time buying Grants of St James's from Allied-Lyons for pounds 32.5m.

Grants packages and supplies branded and own-label imported wines in the UK, and is a wholesaler of wines and spirits to the free on-licensed trade. Its brands include Stowells of Chelsea.

Peter Aikens, chief executive of Clark, said: 'Grants represents an excellent strategic opportunity for Matthew Clark.'

The purchase marks a further and significant stage in the rebuilding of Clark since it lost the lucrative distribution contracts for Martell cognac and Irish Distillers four years ago.

Clark is mainly funding the deal through a pounds 30m rights issue, on a three-for-five basis at 375p a share.

It is the second call on shareholders since June when it raised pounds 12.9m to help buy Freetraders, the drinks wholesaler, from Devenish, which has subsequently been taken over by Greenalls.

Dealings in Clark's shares, suspended at 470p last month, resumed yesterday and the price closed at 498p.

Clark has sweetened the cash call by telling shareholders it expects to lift the dividend for the year to next April by at least 7.5 per cent to 18p.

Industry analysts said that Clark will be able to quickly make large cost savings from Grants, which in 1991/2 made gross profits of pounds 26m but lost pounds 1m after overhead costs.

Grants broke even in the year to last February, and has moved back into profit this year after a sharp round of rationalisation.

More cuts at Grants seem inevitable. There are some overlapping depots in southern England where five of its nine are located.

Its other four are in Runcorn, York, Grantham and Glasgow. Grants's head office is located in Matthew Clark's home town of Guildford, Surrey, and it has 600 employees.

Freetraders, in comparison, runs six depots with a total of 200 staff. It has two depots in the Midlands, which with Grants's representation in the North will give Clark a national network.

The deal will also make Clark one of the biggest operators in the fragmented wholesaling industry with a 4 per cent market share.

One of the main attractions of buying Grants is the company's established 5,500-strong customer base - roughly the same size as Clark's.

The combined annual turnover of Grants and Clark is about pounds 270m, of which about 65 per cent is to the off-licence trade, and the remainder to the on-trade, encompassing pubs, clubs and restaurants.

(Photograph omitted)