Broker snap: Bolt-on acquisition for C&C would please

13th Oct 2010 11:47

Nomura Securities thinks that the business model of Magners cider maker C&C has been strengthened by the company's recent mergers and acquisitions (M&A) activity, but the operating environment for the company remains challenging."With the integration of the acquired Gaymers and Tennent's assets implemented with minimal business disruption, and the sale of the spirits asset, we believe the company's business model has been strengthened substantially in what remains a tough consumer environment," opined Nomura analyst Ian Shackleton.Shackleton thinks the company will focus on growing the profitable core Magners brand on the UK mainland which should provide longer term benefits, but the broker is advising its clients to hold fire on buying the shares given the tough operating environment in the Republic of Ireland and the UK. "We would wait for more concrete signs of delivery before turning more positive," the broker said in a note that reiterated its neutral rating and €3.40 price target.More M&A activity could be on the way, Shackleton reckons. "With a strengthened balance sheet, we see scope for bolt-on deals up to €450m for a cash consideration, which we believe the market would likely warm to," the broker said.