Sunday, 1 July 2018

Defence by Boddington

Most of you are probably too young to remember this event. When Boddington fought off an attempted takeover by Allied Breweries.

There were two ways brewery takeovers could take place. When control was still in the hands of family members, it was when they decided to sell up. Either because they had no interest in running a brewery or because the brewery was rundown and needed a big investment to keep it going.

When the share ownership was widely helf, there was an opportunity for a hostile takeover. By offering over the odds for the shares, sharholders could easily be tempted to sell up.

Allied's attempt to buy Boddington was in the latter category Why is this attempted takeover so noteworthy? Because Boddington successfully fought it off.  It might well be the only time this happened in the UK brewing world.

"Defence by Boddington
Boddingion's Brewery has fired off some ammunition in its defence against Allied Breweries.

Backed by the merchant banker Hill Samuel, the Boddington board says that the combination of increased trade plus improved efficiency enabled it to attain substantially higher earnings in 1969. Unaudited figures now published show that in 1969 pre-tax profita Jumped from £40l,000 to £463,000, while after-tax profits were up from £214,000 to £252,000.

Following the unchanged five per cent interim dividend, the directors now propose  ay a second of interim (in lieu of final) of 15 per cent, which compares with the 1966 final of 11 per cent.
The chairman, Mr. C. G. Boddington. tells shareholders that Allied has not given an assurance that if takes the company over it will keep the brewery open.

If it is closed, says Mr. Boddington, "the traditions of the company will come to an end." The tradition he speaks of is making fine bitter beer.

Boddington's Brewery also says that, following the award of the 2d per pint price increase last month, Boddington should be able to add £125,000 to its revenue this year.

The market clearly expects Allied to increase its bid, or for Whitbread (which holds a 13 per cent stake in Boddington) to enter the fray.

The shares at present stand at a premium of about 6s 6d on Allied's offer price."
Birmingham Daily Post - Saturday 24 January 1970, page 4.

The last sentence of the penultimate paragraph is prescient. Because in the 1980s Whitbread did indeed taakeover Boddington A sad day. And proceeded to totally trash the brand.


Ian Worden said...

Indeed I am too young to remember the Boddington/Allied takeover 'battle' but I think it was a little more complex than your post suggests. Allied did succeed in buying 35% of the company (which it held until 1971) but during the bid Whitbread increased its stake from 13% to 23% - with the family not selling, this almost certainly made it impossible for Allied to gain effective control (i.e. the 75% needed to put Special Resolutions through...). What is especially interesting is that it was certainly unusual for one of the Big Six to frustrate the ambitions of another in this way (involving spending a lot of money). Perhaps Colonel Whitbread felt umbrage at someone trying to snatch part of his umbrella away?

Whitbread did not take over Boddingtons in the end. The company decided to get out of brewing and Whitbread, the obvious buyer, acquired that part to leave the pubs separate for a few more years. A reference on Wikipedia states that in 1986 the brewery was only operating at 50% capacity and had failed to expand nationally to take up the slack - the deal with Whitbread was amicable as a result.

I would disagree that Whitbread "totally trash[ed] the brand". In the 1980s I worked in investments at a large insurance company and I still remember, some time in the late 1980s, the chap whose duties included managing our brewery shares, coming back from an analysts' meeting with Boddington management and saying that the company had decided to make the beer 'more accessible' - in effect to dumb it down. Whitbread did no more than continue a process that was already under way.

Tandleman said...

Spot on Ian.