US: CEDC closes Russian Alcohol buy, ups FY guidance
Central European Distribution Corporation (CEDC) has completed its purchase of a stake in the Russian Alcohol Group, and has subsequently revised its full-year guidance upwards.
The US-based drinks producer and distributor, which operates primarily in Eastern Europe, said yesterday (9 July) that it spent US$181.5m on a 42% stake in the vodka company. The transaction coincides with investment firm Lion Capital's purchase of a controlling stake in Russian Alcohol, which accounts for over 10% market share in Russia's vodka market, according to CEDC.
In addition to the stake purchase, CEDC said it has purchased $103.5m of exchangeable notes which bear interest from 8.3% to 10.5% and can be fully exchanged into additional shares of Russian Alcohol starting in 2010. CEDC has financed its strategic investment primarily through a combination of its share offering completed on 30 June as well as cash and a small component of debt.
"Utilising what we believe to be the largest spirits sales team in Russia, Russian Alcohol is expected to have 2008 net sales of over $500m based on information provided to us in connection with our investment," CEDC said.
"As we move into the strongest half of the year for spirit sales, we look forward to working with Lion Capital and the management team of Russian Alcohol to identify synergies between our companies," said William Carey, CEDC's president and CEO.
CEDC has subsequently upped its full year 2008 comparable fully-diluted earnings per share guidance from between $2.50 and $2.65 to between $2.65 and $2.80. The company also raised its full-year 2009 comparable fully-diluted earnings per share guidance from between $3.50 and $3.70 to between $3.75 and $4.00.
In March, CEDC closed its acquisition of an 85% interest in Copecresto Enterprises Limited, which owns the Parliament vodka trademarks in Russia and abroad. The company paid $180.3m in cash, and 2.2m shares of common stock of CEDC, of which $15m is in cash and 250,000 shares are deferred pending the closing of certain subsequent fixed asset purchase transactions.
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