Investment Dealers' Digest
April 8, 2009
By: Kelly Holman
Campari Swallows Wild Turkey For $575M
Gruppo Campari said Wednesday it has agreed to acquire the Wild Turkey bourbon brand from Pernod Ricard SA for $575 million (€433 million), marking its fourth U.S. acquisition.
Campari is funding its purchase with $732.8 million (€550 million) of senior debt from Bank of America, BNP Paribas, Calyon and Intesa San Paolo, according to sources. In addition, the Milan-based acquirer is paying a 12 times Ebitda purchase multiple based on Wild Turkey's expected cash flow over the next year, or 10 times it current profit.
Bob Kunze-Concewitz, chief executive of Gruppo Campari, said Wild Turkey will add a "brand of strategic relevance" to the liquor company's 40-plus brands portfolio, which includes SKYY Vodka and Cabo Wabo tequila (produced by rock musician Sammy Hagar), among others.
"This was a particularly interesting opportunity for the banks to support Campari in its first loan-financed acquisition," said Lorenzo Ravano, a senior banker at BNP Paribas in Italy.
Campari, which has invested $1.1 billion in its purchases of American liquor brands, will gain control of Wild Turkey's Kentucky distillery, a producer of more than 800,000 bourbon cases annually. In addition, it will pick up the company's aged bourbon inventory, American Honey liqueur and other assets. "Campari is wisely using the current market environment to further strengthen its attractive portfolio,” said Nicholas Kirk, a managing director at The Hickory Group, a New York investment bank that advises on M&A spirits transactions.
Kirk said the purchase will give Campari a leading brand with significant margins and attractive international growth opportunities.
Australia and Japan account for Wild Turkey's largest international markets behind the U.S., where the company derives the bulk or almost half of its annual sales.
For Campari, the purchase will add a noted bourbon maker to its portfolio, which includes the whiskey brands Glen Grant, Old Eight and Old Smuggler.
The deal will leave the acquirer leveraged at three times cash flow, a source said.
BNP Paribas and J.P. Morgan are serving as financial advisors to Pernod, which is receiving counsel from Debevoise & Plimpton attorneys Paul Bird, Gary Friedman, Peter Irwin, Gary Kubek, Elizabeth Pagel Serebransky, Stefan Stauder, Sean Kass, Oliver Olah and Dagmar Tricot.
Morrison & Foerster is advising Campari on the transaction, which is expected to close by June 30. Allen & Overy is serving as advisor to the lenders.
Pernod, meanwhile, announced it is planning a $1.3 billion rights offering on Wednesday. Its sale of Wild Turkey is part of the company's €1 billion plan to divest non-strategic assets. The deal with Campari will boost Pernod's completed disposals to €577 million.
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