Remy Surges on Speculation of Possible Brown-Forman Takeover
Remy Cointreau SA (RCO) surged in early Paris trading on speculation about a possible takeover.
The shares gained as much as 11 percent after the Betaville blog said Brown-Forman Corp. (BF/B) has been working with Goldman Sachs Group Inc. and other banks over the last few months to consider a possible purchase of the cognac maker.
Betaville, edited by freelance journalist Ben Harrington, updated its blog after the original report to say no formal talks are taking place “and the chance of a deal at the moment is slim.” A spokesperson for Remy couldn’t be reached for comment. A representative for Brown-Forman didn’t immediately respond to an e-mail sent outside normal business hours.
Tentative discussions have taken place between advisers to both companies, with Lazard Ltd. representing Remy and its controlling shareholders, Betaville said late yesterday. Moving any deal forward may be difficult as France’s Heriard Dubreuil family controls 60 percent of the liquor company, it said.
“Remy is a jewel in the industry and companies like Brown-Forman, Bacardi or even Diageo would be interested,” Javier Gonzalez Lastra, an analyst at Exane BNP Paribas in London, said in a note. “The controlling family, however, has refused to sell even in more difficult circumstances in the past 20 years. We struggle to see why they would do now.”
Remy shares rose as much as 6.64 euros to 65.72 euros, though quickly pared gains and were up 3.5 percent at 61.16 euros as of 10:57 a.m. in Paris. That gave the company a market value of almost 3 billion euros ($4.1 billion).
The shares have slumped 31 percent in the past year as China’s new government clamps down on extravagant spending. That’s led to declining sales of expensive cognac, used for toasts at lavish dinners and for gifting. Remy gets the largest proportion of its sales and profit from Remy Martin cognac.
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