FORTUNE LAYS IT OUT FOR SWEDISH GOVT
It’s no secret that Fortune Brands wants V&S badly, and they’re making sure their voice is heard. According to a report by the Financial Times, chief Norm Wesley urged the Swedish government to go with Fortune if it wants to secure Swedish jobs and keep the company from splitting. He then went on to outline the problems with other companies (Pernod, Bacardi, Diageo and private equity firms) seeking to acquire Absolut.
PRIVATE EQUITIES COULD FAIL TO COMPLETE. Norm said private equity companies with a with a three- to five-year horizon for investments and aggressive return expectations would be more tempted to "flip" the company rather than secure its longer-term interests. In the current credit environment, he said, private equities would have a harder time financing a deal.
Meanwhile, he assured the Swedes that Fortune has “a strong balance sheet” and that “there is no risk of some type of embarrassment because we can't complete.”
RISK OF ANTI-TRUST REVIEW. Norm pointed out that Fortune doesn’t have a major vodka brand, unlike Diageo (Smirnoff) and Pernod, who is currently fighting for the global rights to Stoli.
“We don't have a competing vodka. If I was the Swedish government I wouldn't want a six-month antitrust review. I would want a safe pair of hands. We provide certainty,” he said.
PRICE IS NOT AN OBJECT. In an unusual environment where price is not the deciding factor for Absolut contenders, other factors come in to play. Factors such as protecting Swedish workers and keeping V&S in tact are issues that the company’s ceo, Bengt Baron, is taking into consideration.
However, Bengt has said recently that bigger companies are not always better because “at a certain point the cost benefits start plateauing and complexity costs shoot up.” So he may, in fact, be more in favor of a standalone initiative for V&S.
IN ANOTHER REPORT by Swedish daily Dagens Nyheter, Norm said he expects Sweden to clarify in Sept. or Oct. how it plans to conduct the sale of V&S.
“Then we will see if it will be through bidding. We can buy the entire V&S or just the global liquor brands.”
PRIVATE EQUITIES COULD FAIL TO COMPLETE. Norm said private equity companies with a with a three- to five-year horizon for investments and aggressive return expectations would be more tempted to "flip" the company rather than secure its longer-term interests. In the current credit environment, he said, private equities would have a harder time financing a deal.
Meanwhile, he assured the Swedes that Fortune has “a strong balance sheet” and that “there is no risk of some type of embarrassment because we can't complete.”
RISK OF ANTI-TRUST REVIEW. Norm pointed out that Fortune doesn’t have a major vodka brand, unlike Diageo (Smirnoff) and Pernod, who is currently fighting for the global rights to Stoli.
“We don't have a competing vodka. If I was the Swedish government I wouldn't want a six-month antitrust review. I would want a safe pair of hands. We provide certainty,” he said.
PRICE IS NOT AN OBJECT. In an unusual environment where price is not the deciding factor for Absolut contenders, other factors come in to play. Factors such as protecting Swedish workers and keeping V&S in tact are issues that the company’s ceo, Bengt Baron, is taking into consideration.
However, Bengt has said recently that bigger companies are not always better because “at a certain point the cost benefits start plateauing and complexity costs shoot up.” So he may, in fact, be more in favor of a standalone initiative for V&S.
IN ANOTHER REPORT by Swedish daily Dagens Nyheter, Norm said he expects Sweden to clarify in Sept. or Oct. how it plans to conduct the sale of V&S.
“Then we will see if it will be through bidding. We can buy the entire V&S or just the global liquor brands.”
posted at 2:25 PM
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