RUSSIA: CEDC to acquire Russian Alcohol stake for $156m
Central European Distribution Corporation has signed a binding commitment to acquire a 40% stake in the Russian Alcohol Group (Russian Alcohol) for US$156.5m.
The transaction is in connection with Lion Capital LLP's acquisition of a controlling stake in Russian Alcohol. In addition to the equity investment, CEDC will purchase $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.
"Our agreements governing this investment include put and call options to acquire the remaining stake in Russian Alcohol starting in 2010 based off of the prior year audited numbers," CEDC said.
The transaction is expected to be closed by mid-year 2008 and is subject to satisfaction of customary closing conditions, including approval by the Federal Antimonopoly Service of the Russian Federation.
CEDC said it plans to finance its strategic investment primarily through a combination of equity and cash with a small component of debt.
Russian Alcohol is the largest vodka producer in Russia with over a 10% market share, and produces leading vodka brands such as Green Mark, which is the number one main stream vodka brand in Russia and Zhuravli, a top selling premium vodka brand behind CEDC's Parliament, which is the top selling premium vodka brand in Russia.
The company also has a well-established long drink business in Russia.
"Utilizing 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.
William Carey, president and CEO said:: "We are extremely excited about this opportunity to be aligned with one of the premier Russian spirit companies. We believe that through our partnership with Lion Capital over the next few years, we will be able to continue to bring value to the Russian Alcohol business. Should we realise full ownership of the Russian Alcohol business, we expect that there will be significant synergies across our businesses in Russia, which we believe should create an enviable portfolio and market position. This investment represents a further step in the development of our Russian strategy and in becoming the market leader in Central and Eastern Europe with the strongest portfolio of branded wines and spirits."
The transaction is expected to be accretive to CEDC's previously announced guidance for 2008 and 2009.
Citi and Renaissance Capital are acting as financial advisors and Dewey & LeBoeuf LLP is acting as legal advisor to CEDC.
Central European Distribution Corporation (CEDC) may appear something of a misnomer for a company headquartered in the US and listed on the New York Stock Exchange but it is a name attracting consider...
Vijay Mallya, owner of the UB Group, sits astride an enormous business empire which includes some of the largest drinks operations in one of the world's most exciting emerging markets. In the second p...
Australia's drinks industry could be facing a few seismic shifts over the next few months....
While there are clearly huge rewards on offer to international players in emerging markets, local spirits companies are also reaping the dividend of economic growth and rising personal wealth, and are...
Diageo has re-iterated its confidence that the group's Reserve collection of super premium spirits brands will stand firm against a global economic downturn....
Thai Beverage has said its planned listing on the Thailand stock exchange is on hold, because of volatility in financial markets....
UK retail giant Tesco is cutting 15% of its total wine range over the next six months, according to reports....
Thai Beverage is on the verge of finally succeeding in getting a listing in its home country, according to local reports....
- AB InBev, SABMiller - Here's what'll happen next
- Is time right for TWE to move for Diageo's wines?
- Is Brown-Forman at the end of the SoCo road?
- Will a sexed-up SABMiller tempt AB InBev?
- Is Brown-Forman doing a Jack Daniel's in Ireland?
- AB InBev makes formal offer for SABMiller
- Diageo secures Xerox Corp CFO as finance head
- Tesco pulls several Carlsberg SKUs in UK
- Diageo makes US$780.5m beer deal with Heineken
- SABMiller formally rejects AB InBev's offer
- The IWSR Duty Free/Travel Retail Summary Report 2015
- Future growth opportunities for global spirits
- Global gin insights - market data, product innovation and consumer trends research
- Global non-Scotch whiskies insights - market forecasts, product innovation and consumer trends research
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research