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Pernod Ricard sells whiskey brand to reduce debt
Our Bureau
Date of posting: 15-04-09
      Last year Pernod Ricard has made de-acquisition plans about its portfolio, and now it has announced to sell its Wild Turkey American straight bourbon and related businesses to Grupo Campari for a total purchase price of US$ 575 million to be paid in cash (€ 433 million at current exchange rate).

      The transaction includes the Wild Turkey brands, along with American Honey liqueur, distillery facilities in Kentucky and related assets, together with aged bulk bourbon inventory, the company has informed.

      The sale of Wild Turkey is an important part of the € 1 billion disposal plan of non strategic assets communicated after the Vin & Sprit acquisition in 2008, the maker of Absolut Vodka. Brands like Glendronach, Cruzan, Bisquit, as well as of the Serkova and Vin & Sprit brands have been sold already at the request of the competition authorities. Up to now, the overall disposal gross proceeds reach approximately € 577 million as of today which is almost 60% of the targeted proceeds through disposals.

      At the same time, Pernod Ricard has announced to raise approximately € 1 billion in equity capital by way of a rights issue. “The proceeds from the rights issue and the completion of the well-advanced non strategic assets disposal plan will allow the Group to strengthen its balance sheet and address the major part of its refinancing needs until July 2013”, the company said.

      Pernod Ricard has debts of more than € 11 billion. For Vin & Sprit alone, the producer of Absolut Vodka, Pernod Ricard paid a price of €5.6 billion including debt. The company seems to use various opportunities now to reduce debt and debt costs in times of shrinking sales. For the third quarter Q3 2008/09, organic sales growth is reported negative at around -13%. The company identified a variety of factors for that, including the Chinese New Year’s Eve being later in the year, increases in excise duties and a larger than anticipated de-stocking from wholesalers and distributors due to the economic crisis.

      De-stocking is regarded as the result of wholesalers and distributors reducing inventories due to credit tightening, but also due to the companies greater focus on receivable risk management.

      For the 2008/09 fiscal year, Pernod Ricard aims for organic growth in profit from recurring operations of between +3% and +5%, lower than the between +5% and +8% previously announced.

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