just On Call: Further room for acquisitions says Campari boss
Gruppo Campari remains on the acquisition trail.
The CEO of Gruppo Campari has described the purchase of liqueur brands Carolans, Frangelico and Irish Mist as financially very attractive and insisted that the deal still leaves room for the Italian group to make further acquisitions.
Speaking on a conference call yesterday (16 September), following the announcement of the deal, Bob Kunze-Concewitz said: "The price of 7.5 times EBITDA is attractive. When you consider in our industry that the average of all the deals that have happened since 2004 has been 17 times - clearly its a good deal."
Campari is paying EUR129m (US$167.6m) to William Grant & Sons for the brands. William Grant, bought the triumvirate along with Tullamore Dew Irish whiskey only five months ago from Ireland's C&C Group, described the offer from Campari as "compelling".
Saying that the deal was fully self-financed, Kunze-Concewitz continued: "The deal is clearly very financially attractive and it's low risk overall."
He said: "This is an easy acquisition for us, it is low risk and integration will be easy. We already account for about 60% of the portfolio's volumes, as we are the distributor of Carolans and Irish Mist in the US and some other markets. And, from the beginning, we have been the global production source for the Frangelico brand.
"What this does is significantly strengthen our critical mass in the US and also increases our group exposure to a number of other markets such as Australia, where we started off operations this year, Russia, which is a key priority in terms of emerging markets for us, as well as Canada, Spain and the UK."
Kunze-Concewitz said that the deal brought the group's net debt to EBITDA ratio pro forma to 2.5, adding that the company's covenant was at 4.5.
"We clearly have room for further acquisitions," he added.
Pushed on where the company's priorities may now lie, he said: "Clearly we are an international company. The US remains a key priority, but we intend to develop our business in other markets and we have been doing that repeatedly in Latin America, Asia Pacific and also Eastern Europe."
He added that the company did not have particular targets at present. "Making acquisitions is not like going to the supermarket. It's more like going to an open air market and seeing what's on offer. You have to be opportunistic."
However, while he again confirmed there was "quite a bit of room" for further acquisitions, he described Campari as "clearly a conservative company" that would never reach "close to our covenant".
To listen to the 22-minute conference call, click here.
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