Campari Agrees to Acquire Grand Marnier for $760 Millionby
Italian spirits maker forecasts immediate earnings boost
Bid of 8,050 euros a share is 60% premium to closing price
Italian distiller Davide Campari-Milano SpA agreed to buy Grand Marnier Group in a deal valuing the French cognac maker at 684 million euros ($759 million), adding more high-end spirits to its portfolio.
Investors in family-owned Grand Marnier will get 8,050 euros in cash per share, plus a possible payment related to a planned sale of real estate, Campari said Tuesday. The bid is 60 percent higher than Grand Marnier’s closing price in Paris on Friday, the last day the stock traded. Campari rose as much as 1.8 percent in Milan, building on Monday’s 5 percent gain.
Chief Executive Officer Robert Kunze-Concewitz compared the takeover with that of bourbon brand Wild Turkey in 2009. Wild Turkey sales were “as flat as a pancake” before the deal, he said, and have since soared. Growing Grand Marnier’s sales, which were 152 million euros last year compared with 138 million euros a decade ago, will become an immediate priority for Campari, he added.
The acquisition is the first for Campari since 2014, and the biggest since Kunze-Concewitz took the helm in 2007. The maker of Skyy vodka also entered an agreement to be the worldwide exclusive distributor of Grand Marnier’s spirits, effective in July, confirming a Bloomberg report. Grand Marnier produces cognac, Armagnac and wines and gets more than half of its 140 million euros in sales from the U.S., where young drinkers are ordering more of the classic cocktails once enjoyed by their grandparents.
Campari said the purchase will add to profit immediately on a full-year basis, including the effects of the distribution agreement.
“Controlling distribution is nowadays key in our industry, but sales of Grand Marnier were split in half throughout the world,” Kunze-Concewitz said, referring to the target’s agreements with luxury-goods maker LVMH in the U.S. and China, and distiller Diageo Plc in Europe. “The brand maybe felt a little lost within the companies’ very large portfolios.”
Campari agreed to buy stakes from the Marnier-Lapostolle family shareholders, and if investors don’t tender 50.01 percent of Grand Marnier’s stock, the main stakeholders will sell shares and relinquish special voting rights to ensure that Campari gets control. Trading in Paris-based Grand Marnier’s shares remained halted after being suspended Monday ahead of the announcement.
Grand Marnier was founded in 1827 by Jean-Baptiste Lapostolle, who started a distillery producing fruit liquors. Its namesake orange-flavored cognac is often used to make Cosmopolitan cocktails, favored by “Sex and the City” character Carrie Bradshaw and singer Madonna if not Kunze-Concewitz.
“I make a wonderful Grand Margarita,” Kunze-Concewitz said by phone. “The recipe on the Grand Marnier website suggests two parts tequila and one part Grand Marnier, but I always use one part for each and they’re phenomenal.”
Campari said it may sell a villa surrounded by botanical gardens that Grand Marnier owns in Saint Jean Cap Ferrat, an exclusive peninsular town east of Nice, on the Mediterranean coast. The house, known as Villa les Cedres, was built in the 1800s and acquired by King Leopold II of Belgium in 1904, according to a regional government website. Louis-Alexandre Marnier-Lapostolle bought the property in the 1920s.
Bank of America Merrill Lynch and Philippe Villin advised Campari on the transaction, with CACIB as joint financial adviser. Brandford Griffith & Associes and Pedersoli & Associati acted as legal advisers.