Davide Campari-Milano SpA said it will purchase Lascelles deMercado & Co., the Jamaican maker of Appleton rum, in a deal worth $414.8 million to hasten the Italian distiller’s push into overseas markets.
Campari agreed to buy a controlling 81.4 percent stake and will make a formal tender offer for all the shares, the Milan-based company said today in a statement.
The acquisition is the third-largest by Campari, and marks the company’s entry into the rum category. The distiller said the deal will give it a market-leading position in Jamaica and provide growth potential in the U.S., Canada and Mexico. Lascelles deMercado’s brands include Wray & Nephew and Coruba.
“The acquisition of a family of premium rum brands will allow Campari to leverage its growing portfolio of premium vodka, bourbon and tequila, while allowing it to boost sales and efficiencies of its network,” Mauro Baragiola, an analyst at Citigroup Inc. in Milan, wrote today in a note.
Campari rose 8 percent to 5.90 euros in Milan trading, the stock’s steepest gain since Oct. 30, 2008.
Campari, which also sells drinks including Aperol and Skyy vodka, is among European distillers seeking expansion outside of home markets as they chase sales in faster-growing economies.
The purchase of LdM is expected to take place in the fourth quarter, Campari said. The deal does not include Lascelles deMercado’s other assets in insurance, transportation and other securities, which are being divested.
The business being acquired had total so-called pro-forma sales of $265.4 million in the year ended Sept. 30. Campari said it will fund the purchase through credit facilities underwritten by Bank of America, Banca Intesa and Deutsche Bank AG.
The acquisition represents a deal multiple of 15 times 2012 earnings before interest, tax, depreciation and amortization, according to Citigroup, and will leave the company with a net debt-to-ebitda ratio of 2.7 times, Campari said.
Campari has further headroom for acquisitions, and will be looking to “strengthen our critical mass in key markets,” according to Chief Executive Officer Bob Kunze-Concewitz. About half of LdM’s sales are outside Jamaica, he said, with the ability to grow in new markets including in Europe.
Bank of America Merrill Lynch acted as financial advisers to Campari, while Morrison & Foerster acted as legal adviser.