US: CEDC lines up Parliament Vodka acquisition

Central European Distribution Corporation is set to buy a majority stake in the owner of the top selling premium vodka brand in Russia.

The US-based company, which operates predominantly in Eastern Europe, confirmed yesterday (16 July) that it has signed a letter of intent to buy "a significant majority interest" in the parent company of Parliament Vodka. CEDC did not name the company in its statement.

The purchase is expected to close within the next six months, the spirits firm said, and will be financed through a combination of cash, debt and equity. The financial details of the purchase were also not disclosed.

"This is an excellent opportunity for CEDC to take its first step in the largest vodka market in the world, Russia," said William Carey, CEDC's president and CEO. "The Russian spirits market continues to experience a premiumisation effect, backed by the strong growth of the local economy, in which the consumer continues to trade up to premium brands."

The Parliament vodka brand is expected to see volume growth this year of over 25%, the company noted, with forecast sales of 2.6m nine-litre cases.

"The company has national sales reach with over 200 salesmen who cover almost all regions of Russia," Carey continued. "This strong local distribution platform gives us the opportunity to not only grow the existing business but also expand sales with new brands both local and imported. We would expect this acquisition, if completed, to be accretive to earnings on an annualised basis by US$0.10 to $0.20 per fully diluted share."

CEDC is the largest vodka producer in Poland and produces the Absolwent, Zubrowka, Bols and Soplica brands, among others. The company also produces and distributes Royal Vodka, the top selling vodka in Hungary.