Emperador buys Whyte & Mackay Group for P31.7B
Screengrab from https://www.emperadorbrandy.com/
MANILA, Philippines — Globally expanding Emperador Inc. is paying a hefty sum to acquire Scotch whiskey-maker Whyte & Mackay Group Ltd. but the Philippine beverage firm expects to immediately unlock gains from this £430 million (P31.7-billion) deal.
In a disclosure to the Philippine Stock Exchange on Monday, Emperador said it expected this acquisition to be “immediately accretive to its earnings.”
The PSE suspended trading on Emperador on Monday pending the submission of a comprehensive disclosure on this transaction.
“Whisky is the second fastest growing spirits segment in the world next to brandy. With this acquisition, Emperador will be exposed to two of the fastest growing spirits segments in the world. The global demand for Scotch whisky has shown strong growth over recent years and is expected to continue this momentum going forward,” said Emperador chair Andrew Tan, who personally flew to London to participate in the bidding for Whyte & Mackay.
“We are continuously looking to enhance shareholder value through earnings accretive investments. We believe that Whyte & Mackay is a prized asset with excellent growth opportunity and its acquisition is in line with our plans to enhance our product portfolio. Whyte & Mackay has a global distribution network in over 50 countries that Emperador Brandy will have access to,” he added.
Whyte & Mackay has delivered strong revenue and profit growth, Emperador said.
It was reported over the weekend that after two rounds of bidding for Whyte & Mackay, Emperador beat formidable rivals like French luxury goods conglomerate LVMH Moet Hennessy Louis Vuitton SA, American liquor-maker Brown-Forman (makers of Jack Daniel’s whisky), Italian beverage giant Gruppo Campari and Russian billionaire Roustam Tariko, producer of Russian Standard vodka.
Tan, the third richest man in the Philippines based on Forbes magazine’s estimate of $4.7 billion in 2014 net worth, is taking over the business from India’s United Spirits Ltd. (USL), which had agreed to sell to satisfy UK anti-trust concerns.
Emperador told the Philippine Stock Exchange that it had entered into an agreement with United Spirits through its wholly owned subsidiary, Emperador UK Ltd. The all-cash offer has been agreed at an enterprise value of £430 million.
The transaction is subject to obtaining necessary regulatory approvals and USL shareholder approval. For instance, approval from the Reserve Bank of India is required because the sale would result in a significant write-off of loan amounts recoverable by United Spirits from its British subsidiary.
Whyte & Mackay is the fifth largest maker of Scotch whisky in the world with a history of more than 160 years and ownership of some of the most iconic Scotch brands in the industry. It also holds substantial aged whisky inventories. The group has production capacity of 50 million liters of alcohol per annum with five distilleries and one bottling plant in Scotland. Whyte & Mackay produces a wide range of products sold in more than 50 countries mainly in Europe and North America. It also has strong presence in the global travel retail space.
“The acquisition of Whyte & Mackay is in line with Emperador’s long term strategy to focus on the Philippines and expanding its global footprint,” Emperador said.
The enterprise value of 430 million pounds for Whyte & Mackay represented a multiple of 19.3 times the estimated 2014 cash flow based on earnings before interest, tax, depreciation and amortization (EBITDA), newswire Reuters earlier reported.
More than 10 bidders across the global participated in this bidding, after which the Philippine group emerged as the best suitor after two rounds, other sources said.
Rothschild, Rabobank and Standard Chartered managed United Spirits’ bidding process while Emperador was advised by Australian investment house Macquarie.
This is so far the largest overseas acquisition made by Emperador, which has been picking up assets in Europe since last year. It first gained a foothold in Spain early last year with the acquisition of Bodega San Bruno S.A., a brandy company based in Jerez. It afterwards boosted overseas production capability with the purchase of 409 hectares of vineyard land in Madrid, bringing close to 1,000 hectares its vineyard landbank in Spain.
The company afterwards expanded its business in Spain by buying a 50 percent stake in integrated brandy producer Bodega Las Copas S.L., a unit of Spanish sherry bodega González Byass, for P3.7 billion. Bodega Las Copas’ operations in brandy- making run the full scale with its vineyard near Toledo, its distillery plant in Tomelloso, Ciudad Real and its Las Copas brandy production premises in Jerez.
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