ABSOLUT UPDATE: THREE MONTHS TO GO?
While the Swedish government has refused to put a timeframe on the privatization process of V&S, it is expected to be finished within the next 3 to 6 months, according to Thomson Financial. Credit Suisse estimates V&S could sell for over $7 billion and values Absolut (10 million cases) at around $6 billion. The cost of exiting V&S distribution arrangements could be as much as $980 million, which brings the total cost to approximately $8.4 billion for the lucky winner. Of course, if Beam Global succeeds in acquiring Absolut, it would not have to pay exit costs for V&S’s international distribution agreements with Maxxium, of which Beam is a member of, and Future Brands, which is a j-v between Bean and V&S. Some analysts, however, fear Fortune would have a harder time financing the deal.
“They've got a billion dollar head start,” said Credit Suisse analyst Michael Bleakley to Thomson Financial. “But if the auction goes to the highest bidder -- which I think one has to read the Swedish Government would like to see -- then Fortune have got a point at which they have to leave the negotiation table in terms of not having quite as deep a pocket as some of the European players.”
As you’ll recall, Beam Global is generally considered the front-runner among analysts, particularly after striking a deal to sell its wine biz to Constellation this week. Other contenders include Pernod, Bacardi, Diageo, Swedish private equity firm EQT and possibly Anheuser-Busch.
The main problem for other bidders hinges around competition. Pernod has said it would have to choose between acquiring Absolut and Stoli, while Diageo would likely face competition hurdles due to Smirnoff. We’ve also heard several industry insiders say Bacardi is already too heavy with white spirits and should perhaps look at acquiring a whiskey instead.
The Swedish authorities say a trade sale is the most likely means of achieving the highest value, but they are also open to considering a possible stock market flotation of V&S.
To read more background on the Absolut bidders, click here.
“They've got a billion dollar head start,” said Credit Suisse analyst Michael Bleakley to Thomson Financial. “But if the auction goes to the highest bidder -- which I think one has to read the Swedish Government would like to see -- then Fortune have got a point at which they have to leave the negotiation table in terms of not having quite as deep a pocket as some of the European players.”
As you’ll recall, Beam Global is generally considered the front-runner among analysts, particularly after striking a deal to sell its wine biz to Constellation this week. Other contenders include Pernod, Bacardi, Diageo, Swedish private equity firm EQT and possibly Anheuser-Busch.
The main problem for other bidders hinges around competition. Pernod has said it would have to choose between acquiring Absolut and Stoli, while Diageo would likely face competition hurdles due to Smirnoff. We’ve also heard several industry insiders say Bacardi is already too heavy with white spirits and should perhaps look at acquiring a whiskey instead.
The Swedish authorities say a trade sale is the most likely means of achieving the highest value, but they are also open to considering a possible stock market flotation of V&S.
To read more background on the Absolut bidders, click here.
posted at 9:56 AM
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