Under pressure from US hedge fund Engine Capital, which holds just under 5% of C&C Group, the Irish beer and cider manufacturer, marketer, and distributor has agreed to "commence a process" to appoint a non-executive director to its board with "capital expertise" from a shortlist created by Engine Capital.
On June 7, just two months ago, CEO Patrick McMahon was forced to step down immediately after the company disclosed "accounting mistakes," "errors of judgment," and "failures in the Group's reporting framework." This led C&C Group to make retrospective charges totaling EUR 17 million (USD 18 million) to previously reported financial statements. These adjustments included an underlying operating profit correction of EUR 5 million and an exceptional charge of EUR 12 million related to "onerous apple contracts."
Shortly after these revelations, Engine Capital issued an open letter accusing C&C Group of "succession missteps, strategic errors, execution blunders, and an inability to return to its higher historical earnings profile." The hedge fund criticized the maker of Tennent’s beer and Bulmers cider for having had four CEOs in less than four years, further exacerbating uncertainty and execution risks. Engine Capital also urged C&C to conduct a business review "aimed at a sale."
Engine Capital had nominated two candidates for director positions, with the vote scheduled for the AGM on August 15. However, after reaching an agreement with C&C Group to appoint one non-executive director with "capital expertise" from its shortlist, Engine Capital has withdrawn its proposed nominees.
In a statement to investors, C&C Group announced, "Engine has confirmed it will vote in support of all resolutions proposed at the AGM in line with the board’s recommendations."
