C&C Group, the owner of Tennent’s Lager and Magners Irish cider, has been facing a series of challenges in recent months, leading to significant turmoil within the Dublin-based drinks company. However, amid the chaos, there are signs that the company may be on the path to overcoming its obstacles and navigating towards calmer waters.
The Turbulent Times
The troubles at C&C Group have been multifaceted, with issues ranging from profit warnings to a botched IT project and accounting errors. These issues culminated in the departure of two chief executives within a short span of time, leaving the company in a state of uncertainty and vulnerability. The situation was further exacerbated by the intervention of activist investor Engine Capital, which urged the company to consider a sale due to its perceived underperformance and undervaluation in the market.
In a scathing letter to the board in June, Engine Capital characterized C&C as a “perennial underperformer” suffering from a combination of structural and self-inflicted problems. The hedge fund, which holds nearly 5% of the company, called for the appointment of two new directors with relevant financial expertise and a shareholder mindset to the board in an effort to steer the company towards a more successful trajectory.
A Path to Resolution
Despite the initial friction between C&C Group and Engine Capital, there appears to have been a thaw in relations in recent weeks. A statement released by C&C to the stock market indicated that the two parties have reached a cooperative agreement to work together in the best interests of the company, its shareholders, and other stakeholders. As part of this agreement, C&C will nominate a new non-executive director with capital markets expertise to the board, chosen from a list of candidates agreed upon with Engine. In return, Engine has agreed to withdraw its proposed nominees for election at the company’s annual meeting.
In a recent update to the market, C&C announced the appointment of Feargal O’Rourke as an independent non-executive director, emphasizing that this decision predated the engagement with Engine and will not impact the agreement to appoint a new non-executive director. This move signals a willingness on the part of C&C to address the concerns raised by Engine and work towards a more collaborative and productive relationship.
Financial Outlook and Strategic Initiatives
Despite the challenges faced by C&C Group, the company remains optimistic about its financial outlook for the coming years. Despite adverse weather conditions in June, which impacted trading, C&C is confident in its ability to meet its expectations for the 2025 financial year, with anticipated growth relative to the previous year. Additionally, the company has reaffirmed its commitment to delivering at least €150 million to shareholders over the next three years through a combination of share buybacks, dividends, and special dividends, depending on market conditions.
The positive outlook for C&C has been reflected in the performance of its shares, which were up nearly 3% in mid-afternoon trading. This uptick in share price underscores investor confidence in the company’s ability to navigate through its challenges and emerge stronger on the other side.
In conclusion, while C&C Group has faced significant turbulence in recent months, the company appears to be taking steps towards overcoming its challenges and charting a course towards success. The cooperative agreement with Engine Capital, the strategic appointment of new directors, and the commitment to delivering value to shareholders all point towards a promising future for the Dublin-based drinks company. By addressing its issues head-on and working collaboratively with stakeholders, C&C Group may well be on the path to recovery and growth.
