Shares in Stock Spirits (STCK) fizzed 43% higher to 384p after the central European branded spirits producer recommended a £767 million takeover bid from private equity outfit CVC.
Pitched at 377p per share, a 41% premium to yesterday’s closing price, investors seem to think the offer could flush out rival bidders given the shares are trading comfortably above the offer price.
HIGH-QUALITY ASSET
Led by Polish CEO Mirek Stachowicz, Stock Spirits is the high-quality spirits and liqueurs business behind well-established brands including Żołdkowa, Lubelska, Božkov and Stock Prestige, not to mention local leaders Stock 84 brandy, Fernet Stock bitters, Keglevich and Limoncè.
Shares argued Stock Spirits was a bargain share at 272p here in June, pointing out the robustly cash generative company traded at an unwarranted discount to the wider European beverages sector, despite offering a compelling play on the premiumisation trend across central and Eastern Europe and Italy and years of robust performance.
The stockmarket’s persistent undervaluation of Stock Spirits enticed CVC to lodge a bid.
The private equity firm believes the future development of the company will be ‘best served as a private business, operating with an appropriately leaner central overhead, with rapid access to capital and with the benefits of a longer-term investment approach.’
Commenting on the board’s decision to unanimously recommend the takeover, chairman David Maloney said the offer ‘reflects our strong position and represents compelling value for Stock Spirits shareholders.
‘Stock Spirits continues to deliver an extremely resilient performance and has an even more loyal and engaged consumer base for its outstanding brands. We believe that CVC’s support for our existing strategy and the investment that it intends to make in order to grow our business means that this offer will benefit all of Stock Spirits’ stakeholders.’
THE SHORE CAPITAL VIEW
Shore Capital, which has a ‘buy’ stance on Stock Spirits, commented: ‘An approach for Stock Spirits is understandable in our view given its leading market position across several European markets, notably in Poland and Czech Republic, and the potential to generate mid-to-high single digital annual revenue growth across these territories.
‘It remains to be seen if the bid flushes out counter offers from industry players, which may be able to extract greater synergies.’
