Campari Milano To Acquire Wild Turkey For $575M

Pernod Ricard SA, the maker of Absolut vodka and Chivas Regal whiskey, said Wednesday, April 8, it had agreed to sell its Wild Turkey bourbon for $575 million and would sell €1 billion ($1.3 billion) of new shares to pay down its debt.
The world's No. 2 liquor maker is selling Wild Turkey and related distilleries in Kentucky to Italy's Davide Campari-Milano SpA. The deal values the operations at 10 times earnings after advertising and promotion, Pernod said. That is equivalent to about 12 times Wild Turkey's Ebitda for the past 12 months.
The acquisition is the biggest ever by Milan-based Campari, which is best known for the herb liquor that bears its name, and also marks the group's first significant expansion into the brown liquor market.
"It is a unique opportunity to enter the attractive bourbon whiskey category and exploit its growth potential through a global and leading brand," Campari CEO Bob Kunze-Concewitz said in a statement.
The deal, Campari's fourth acquisition in the U.S. market, takes its spending on U.S. brands to a total of $1.1 billion. The Italian company bought Skyy vodka in 2002, before adding smaller brands Cabo Wabo tequila and vodka-based spirit X-Rated in 2007.
The transaction will be financed through credit facilities underwritten by Bank of America Corp., France's BNP Paribas SA and Crédit Agricole SA, and Italy's Intesa Sanpaolo SpA.
The sale of Wild Turkey is the biggest disposal to date under Pernod's plans to offload about €1 billion of assets that belonged to V&S Vin & Sprit AB, which it bought in July for €5.6 billion. It has sold €577 million of those assets, including Bisquit Cognac, which was sold for €31 million in March, and Serkova Vodka, which was sold in January.
Pernod has been selling the assets partly to meet regulatory requirements relating to its acquisition of V&S, which owned Absolut vodka, and partly to help pay down debt of roughly €12 billion, about half of which was amassed in buying V&S.
"The proceeds from the rights issue and the completion of the well-advanced nonstrategic assets disposal plan will allow the group to strengthen its balance sheet and address the major part of its refinancing needs until July 2013," Pernod said.
Pernod said it intends to launch the rights issue "as soon as possible." The sale has the support of major shareholders including its founding family, who hold shares through Paul Ricard SA, and Groupe Bruxelles Lambert, the investment vehicle of Belgian billionaire Albert Frere.
The deal is subject to antitrust approval and is expected to close before June 30.
Shares in Pernod traded early Wednesday morning at €42.35, down €2.15, or 4.8%, on their previous close. Shares in Campari traded at €4.78, up €0.027, or less than 1%.
Pernod took financial advice from BNP Paribas and J.P. Morgan Chase & Co. It received legal counsel from a Debevoise & Plimpton LLP team led by Paul S. Bird and including Gary M. Friedman, Peter J. Irwin, Gary W. Kubek, Elizabeth Pagel Serebransky, Stefan P. Stauder, Sean Kass, Oliver A. Olah and Dagmar Tricot.
Campari took legal advice from Morrison & Foerster LLP and tapped Allen & Overy LLP for counsel on its funding arrangement.