-- Deal to cost Campari $414.8 million
-- Campari's third-biggest acquisition
-- Fits broader strategy of growth in emerging markets
(Adds detail throughout.)
By Manuela Mesco
MILAN--Gruppo Campari SpA (CPR.MI) Monday became the latest
European drinks maker to snap up a local producer in Latin America
with the acquisition of Jamaican rum maker Lascelles deMercado
& Co.
The Italian company has acquired 81.4% of Lascelles, whose
brands include Appleton Estate, Wray & Nephew and Coruba, and
plans to buy the rest by the end of the year. It is buying the
Jamaican firm from CL Financial, and the entire deal will cost it
$414.8 million. The acquisition should lead to a profit from next
year, Chief Executive Bob Kunze-Concewitz told a news
conference.
The price is at a historic multiple of 15 of the company's
Ebitda of the 12 months up to June 2012.
Mr. Kunze-Concewitz said the move will make the Americas
contribute 40.4% of the global company's revenue.
Lascelles marks Campari's third-biggest acquisition, after Wild
Turkey and Skyy Spirits--bought in 2009 and 2001, respectively--and
its first rum brand. This is the latest step in Campari's strong
acquisition policy, which led to a number of deals in the past
years.
In 2011 alone, the company bought Brazilian Sagatiba, which
produces the local drink cachaca, and Russian distributor Vasco
International. Kunze-Concewitz said that although there is still
financial capacity for more acquisitions, the company will more
likely spend the next few months to "digest" the latest
operation.
Global beverage companies are competing more fiercely than ever
for a leading position in Latin America, a crucial growth region
for the industry. The strategy is partly a reaction to the torrid
conditions they are facing in Western Europe, as recessions and
subsequent government austerity measures force drinkers to spend
less.
The U.K.'s Diageo PLC (DGE.LN), owner of Guinness stout and
Johnnie Walker whisky, last month said it remains in close talks
with Mexico's Beckmann family over a reported $3 billion deal for
tequila giant Jose Cuervo. And in May, the company bought Ypioca,
one of Brazil's biggest producers of cachaca, the country's
best-selling spirit, for 300 million pounds ($476.5 million).
Diageo expects developing economies to contribute half of its
global revenue by 2015, up from almost 40%.
Brewers are also being drawn to the region. Anheuser-Busch InBev
NV (BUD) has so far this year acquired the 50% stake in Mexico's
Grupo Modelo SAB de CV (GMODELO.MX) that it didn't already own for
$20.1 billion, as well as gaining control of Dominican brewer
Cerveceria Nacional Dominicana SA for over $1 billion.
"It's important to have local brands in emerging markets, as
these are brands that already have their own distribution lines,
which companies can use to expand the market for their own brands.
As for Campari's acquisition, this is significant as it marks the
company's access to the rum market. Campari continues to expand its
portfolio without overburden its financials," said Giulio Lombardi,
senior analyst at Fitch Ratings.
Mr. Kunze-Concewitz said spirits will account for more than 80%
of Campari's annual revenue following the deal.
At 1433 GMT, Campari shares were up 7.5% at EUR5.88.
-Write to Manuela Mesco at manuela.mesco@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
