US: CEDC strikes alliance with Remy Cointreau
Central European Distribution Corporation (CEDC) has revealed plans to enter into a strategic alliance with Remy Cointreau. The company has also signed a letter of intent providing for the acquisition of Poland's third largest distiller Bols Sp. s o.o. The transaction is expected to cost around US$265m.
CEDC said yesterday (18 April) that it will fund the acquisition purchase price with a combination of cash and shares of CEDC common stock. The stock portion of the consideration will range from 45% to 60% of the total purchase price, at the option of CEDC. These shares of CEDC common stock will be subject to a one-year lock-up period. The cash portion of the purchase price will be funded through a contemplated debt financing.
The strategic alliance between CEDC and Remy Cointreau contemplates, among other things, that CEDC will have a perpetual and exclusive trademark license for the manufacturing, marketing and sale of Bols vodka in Poland and Russia, and an exclusive distribution contract in Poland for Remy Cointreau's current import portfolio on terms and conditions to be agreed.
The acquisition is expected to close in the third quarter of this year, subject to regulatory and CEDC shareholder approval.
William Carey, president and CEO, said in a statement: "We see this as the first step in becoming one of the leading players in the international spirits market. We are excited about the potential synergies that we anticipate, such as increasing integrated margin, increasing organic growth and the leveraging of our distribution infrastructure. We are extremely excited about the possibilities of working with an excellent management team with a state-of- the-art production facility. Based upon Bols' projections made available to us, we expect that the acquisition should be accretive to CEDC's annualised earnings."
Jean-Marie Laborde, CEO of Remy Cointreau, added: "In a fast changing Polish spirit market, we are very excited about the prospects this partnership opens up. It should help us accelerate the development of our premium spirit portfolio. We welcome the chance to work with CEDC's Management to achieve, together, our strategic goals."
Separately, Carey also announced that CEDC has submitted its second round bid to the Polish Treasury regarding the strategic stake to be sold in Polmos Bialystok, the leading Polish distillery. "We anticipate that final selection of the strategic investor will be made within 30 to 90 days," he said.
Bols is Poland's leading producer of premium vodkas - including Bols and Soplica - with a total market share of approximately 12%. Bols, in addition to vodka production, also has one of the leading import portfolios of premium wine and spirit brands in Poland, including such well-known brands as Remy Martin, Piper-Heidsieck, Cointreau and Metaxa.
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