Taunton says talks might lead to bid

NIGEL COPE

Taunton Cider, Britain's second-largest cider group which is best known for the Diamond White and Dry Blackthorn brands, announced yesterday that it was in talks that might lead to a bid for the company.

The shares rose 16 per cent to 212.5p, valuing Taunton at pounds 233m. It declined to give further details of the bid discussions, but said the talks involved "material pre-conditions".

City analysts believe the most likely candidate to buy Taunton is Matthew Clark, the drinks group that acquired the Gaymer cider and Babycham business in a pounds 109m deal last October.

Gaymer is thought to be too small to compete effectively against the dominant two players in the UK cider market.

HP Bulmer is the market leader, with 45 per cent, followed by Taunton with 33 per cent and Gaymers with 11 per cent. The acquisition of Taunton would transform Matthew Clark into joint market leader and enable it to compete with Bulmers' marketing and distribution muscle.

There is also a boardroom connection between the two companies. Matthew Clark's chairman, Michael Cottrell, was also chairman of Taunton until last year but stepped down when Clark's acquired Gaymer. Matthew Clark's shares closed 9p down at 659p.

Bulmer, best known for its Strongbow brand, may also be interested but would encounter competition problems because it would then control nearly 80 per cent of the market.

Whitbread, the brewing and leisure group, is another possibility, though it has a distribution deal with rival cider maker Merrydown.

Britain's cider market has been under intense pressure from cheaper own- label brands. One of Taunton' strengths is that in addition to its branded portfolio, which includes premium ciders such as Red Rock, it is also the biggest seller of own-label cider to supermarkets.