Stock Spirits hits out at Polish wholesaler as takeover tussle escalates

By bne IntelliNews April 19, 2016

Central and Eastern European distiller and alcohol distributor Stock Spirits on April 19 urged shareholders to reject resolutions from its biggest shareholder, as a hostile takeover tussle continues to escalate.

A letter issued by the board of the London and Prague listed company warns investors that Portuguese businessman Luis Amaral's efforts to install two board members at the upcoming AGM on May 23 would grant him “undue influence” and represent an “overriding conflict of interest”. Amaral has been speculated to be hoping to take control of Stock Spirits via his vehicle Western Gate Private Investments since buying 9.7% late last year.

Amaral’s call for the ouster of Stock Spirits CEO Chris Heath was answered on April 18. However, the board says the persisting demand to add two additional directors would serve only Amaral’s interests. The Portuguese is CEO and the largest shareholder at Polish wholesale distributor Eurocash – which is Stock Spirits' biggest customer.

In recent weeks he has blasted the company, in particular for the rapid decline in market share in its biggest market Poland over the past couple of years. Stock Spirits' main line of defence remains a warning to shareholders - many of them London-based funds, all holding less than 10% - that Amaral's interests do not match those of other minorities.

Apart from voting against the resolutions giving Western Gate greater control, the board also urges Stock Spirits shareholders to reject proposal for what the letter calls a “costly review” of the company’s M&A strategy and approval of any such deals at future general meetings.

"Whilst M&A should rightly form part of the company's future, for now, we would like to see management focus on addressing the very serious concerns we have highlighted,” Armal said in his own statement on April 18.

“We believe this represents an overriding conflict of interest because as a customer Amaral would potentially benefit from changes to the company’s pricing strategies, understanding our competitive environment, and preventing any geographic diversification away from Eurocash’s home market of Poland,” Chairman David Maloney said in the letter.

“Additionally, the appointment of directors chosen by Western Gate would effectively provide a transfer of influence, without any commensurate control premium to other Stock Spirits shareholders," Maloney said.

Western Gate has a 9.7% stake in the Stock Spirits, which is listed in London and Prague. It has struggled in recent years as its has seen its share of the Polish market, by far its largest, sliding. However, on April 14 it released strong first quarter figures apparently a reaction to Amaral's push to replace the CEO, analysts said.

J&T Bank analyst Milan Lavicka said in an April 19 note: “On the one hand, we agree that Luis Amaral has strong conflicts of interest and his priorities may be different, but it does not change the fact that the current management was not able to solve the deteriorating position of the company in Poland in the last two years.”


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