Diageo in frame for Beam bid

26 November, 2010

Diageo is being tipped as a possible bidder for the American spirits arm of Fortune Brands.

Pressure is growing from an activist shareholder for the diverse group – which includes golf equipment and home products as well as drinks – to be broken up.

Diageo revealed in August that it had free cash flow of £2 billion at its June 2010 year-end, which gives it good scope

to make acquisitions.

The Smirnoff and Johnnie Walker firm has long been linked with a possible bid for the drinks division of French-based multinational LVMH – which includes Moët Hennessy – but Fortune could

offer an attractive alternative.

Its brands include Jim Beam and Courvoisier, which would fill holes in Diageo’s global portfolio for big-name premium brands in Bourbon and Cognac.

Fortune also has Maker’s Mark Bourbon, Teacher’s blended Scotch whisky, Sauza tequila, Sourz, Harveys sherry, De Kuyper, Cruzan rum and Laphroaig Islay malt.

It is the world’s fourth biggest spirits producer after Diageo, Pernod Ricard and Bacardi.

Pernod and Bacardi are both likely rivals to Diageo for a Fortune spirits division bid, if the business comes on the market.

A deal based on a similar earnings multiple to previous major spirits sell-offs such as Allied Domecq and Seagram would value Fortune’s spirits business at around US$8 billion.

US analysts suggest the deal could be part-funded by a sell-off of a plethora of smaller brands within the Fortune portfolio.




Bookmark this


Site Search

COMMENT

Richard Hemming MW: beware inverse snobbery

Few things can bring communal pleasure so intimately as wine. Apart from a hot tub, perhaps. Sport can trigger mass jubilation, film gives us shared empathy, but wine has a nigh-unique ability to bestow conviviality among us through a shared bottle – which makes it especially galling that we spend so much time divided over it.

Click for more »
Upcoming events

Polls

Is blended Scotch overshadowed by single malt in retailers?

  • Yes
  • No
  • Don't know

Facebook

Twitter