US: CEDC lines up Hungarian acquisition

Central European Distribution Corporation is poised to snap up Bols Hungary.

The US-based company announced today (12 June) that it has signed a Memorandum of Understanding (MOU) with Remy Cointreau and DELB for the purchase of 100% of the share capital of the Hungarian company. Financial details were not disclosed.

The purchase would include ownership of the Royal Vodka trademark, the number one selling vodka in Hungary, which is produced by CEDC in its Bols Poland production facility. In addition to Royal Vodka, Bols Hungary has an import portfolio which includes Bols Vodka and Liqueurs, the Remy Cointreau portfolio, the Grants portfolio, the C&C portfolio and Jagermeister.

"In line with our planned expansion in Central Europe, we are taking our first initiative to acquire a well-positioned company in Bols Hungary," said William Carey, CEDC's president and CEO. "We believe this is a solid local business that has the leading vodka brand in Hungary, and an extensive import portfolio. Bols Hungary is a well-managed spirit business in Hungary, and has a leading on-trade sales team, which is a key driver for development of brands in Central and Eastern Europe. Our extensive experience in direct sales and marketing of premium brands coupled with the strong management team of Bols Hungary will create a platform for further expansion in the region."

"We expect to acquire Bols Hungary in a strong financial condition, with no debt on the balance sheet and a projected 10%-12% EBITDA margin," Carey continued. "We expect the acquisition would be accretive to our 2006 earnings."

Pending the clearance of a number of hurdles, including board approvale and due diligence, the acquisition is expected to close by mid-July. CEDC expects to pay the purchase price from its own funds.

Speaking to just-drinks today, Carey said: "As the producer of Royal Vodka in its home market, we feel this is a very natural fit. Also, when you look at a market like Hungary, where the majority of the drinks business is in the on-trade, it pays to have an on-trade sales force - something that Bols Hungary has." Carey would not be drawn, however, on the price of the transaction. "We will announce the cost in due course," he said.