UK: Pernod Ricard counters M&A inactivity charge, opens door to future buys
Pernod Ricard's MD of finance has said the company is willing to consider bolt-on purchases
Pernod Ricard has defended itself against charges levelled by an analyst last week, claiming that Diageo is seen as a more attractive investment vehicle, thanks to the latter's stronger activity in the M&A arena.
In commenting on Pernod's FY results, equity research firm Nomura said last week that it felt that Diageo is “now seen by many investors as the preferred investment” because it “has the M&A story in spirits”. Pernod has been busy divesting non-core brands in recent years as it looked to balance the books after buying Vin & Sprit and the Absolut vodka brand in 2008.
Speaking to media in London today (4 September), however, Pernod's MD of finance, Gilles Bogaert, claimed that the charge was not wholly valid. “If you look at the last 12 years,” he said, “we've been the main consolidator in our industry, from jointly buying Seagram with our main competitor (Diageo) … to the Absolut acquisition. We've been very active in M&A; the last deal was just four years ago.
“Thanks to those deals, we have a very strong portfolio. I wouldn't say we have an obvious strategic gap in the portfolio.”
Bogaert noted that the emphasis in recent years has been on “delivering organic growth” and that Pernod has succeeded in deleveraging itself since the Absolut transaction.
“Today,” he added, “we can say we are open to some tactical, bolt-on acquisitions either in emerging markets or in the US, if it makes sense and if it complements the portfolio we have. But, the focus is still on organic growth: We want to remain financially disciplined.”
When asked if the company regretted selling its US Bourbon brand, Wild Turkey, to Campari three years ago, Bogaert said: “That was part of the disposal programme when we needed to deleverage the company. It's fair to say that we don't have a Bourbon or an American whiskey in the portfolio, but we do have a brand that competes with the American whiskies and is most buoyant in the US, and that's Jameson (Irish whiskey).”
Bogaert was speaking at a presentation covering Pernod's full-year results, which were announced last week.
What do Bacardi, Diageo and Pernod Ricard have in common? Aside from the obvious, Ian Buxton proffers that they share the same problem when it comes to Bourbon, and that's their lack of it....
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