Broker snap: Citi applauds Gaymers deal

1st Dec 2009 12:59

Magners cider maker C&C has had a tough time of it since rivals muscled in on its 'cider over ice' market, but Citigroup thinks the acquisition of The Gaymer Cider Company for £45m could prove a winner.Citi has crunched some numbers and reckons the deal could be earnings enhancing to the tune of 3-5% by fiscal 2012/13.'This deal is strategically sound in our view. It gives C&C: (1) further scale in GB [Great Britain]; (2) a broader cider portfolio with which to complete with Heineken and (3) a sales force and presence in the off trade,' Citi analyst Liz Hartley opines.The broker has reiterated its 'buy' recommendation and €2.95 target price. 'While the group's medium-term focus will now be on integration (ABI and Gaymer assets), we believe C&C is now a more tangible competitor to market leader Heineken,' Hartley concluded.