Buyers circling as Conviviality calls in administrators
Potential buyers are believed to be circling troubled alcoholic drinks wholesaler Conviviality after it announced its intention to call in administrators PwC, having failed to raise £125m to save the business.
An update posted to the London Stock Exchange on Thursday 29 March stated that the company would appoint administrators within 10 days.
Directors said the business, which includes off-licences Bargain Booze and wholesale arm Matthew Clark, will continue to trade in a bid to preserve as much of its value as possible, despite previously reporting that shareholders should expect to receive "little-to-nil" value.
As speculation of a possible buy-out grows it has been reported that North American brewer Molson Coors and the C&C Group are among the parties interested in acquiring all or part of the company, which employs 2,600 people.
Multiple sources have told The Caterer that Conviviality's fall into administration could have severe repercussions for many of the 23,000 operators in the hospitality industry it supplied.
David Kelleher, director of commercial development at food solutions partner PSL said: "Six weeks ago Conviviality made a statement of half-yearly figures showing growth and really strong trading, at that point nobody would have been thinking ‘I better have a contingency back-up plan in place just in case they go pop'. Yet six weeks down the line here we are. I think it shows procurement has more work to do in terms of making sure there is always a contingency plan in place.
"It's bad in the short term because there will be obvious supply issues to sites and they are going to feel a bit of pain, but in the long term it opens the market back up again. I think we will see some other wholesalers or specialists pop up, bringing a bit more competition back into the market place."
Among Conviviality's customers is the 900-strong JD Wetherspoon group, which has said that deliveries from the supplier are continuing and while it hopes a solution can be found, it has a contingency plan in place.
The administration announcement followed two profit warnings in March and the discovery of an unexpected £30m tax bill, that saw company shares on AIM suspended.
Conviviality became the UK's largest alcoholic drinks wholesaler following the purchase of Matthew Clark in 2015 and Bibendum in 2016.
Chief executive, Diana Hunter stepped down with immediate effect last month.
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