AUSTRALIA: Southcorp merger to thwart spirit giant takeover, says CEO
Chief executive Keith Lambert said: "The major spirit companies had operated to their head room after the Seagram sale so wine would start to attract the spirits companies. This we felt would be detrimental to Australian wine and detrimental to us in a supply and distribution sense.
"Southcorp were rivals and we saw an opportunity to work our brands in concert. We felt on the financial side everyone was looking at Southcorp. Rather than be a pawn we can be the architect of future consolidation," he added.
He told the conference that in his view the family holding would be enough to ward of any takeover attempt as no one could achieve the necessary 90% holding without first talking to the Oately family.
The new business, he went on, was about building shareholder value. Lambert said: "Wine companies don't typically attract investors as they have tended to be regarded as a little obscure by fund investors. But wine is back on the radar screen of the investment community and we are seeing a fantastic appetite for shares in the market place."
The company also confirmed that selling the water heaters business had become a serious consideration. Lambert said: "We have to admit the water heaters business doesn't go well in wine business."
He said he believed the business was a very sellable asset, but did not confirm when a sale might go ahead. Any money from a sale, Lambert said, would be used to reduce debt, after that Southcorp would have to assess the situation.
Although he said the company was unlikely to be looking at foreign acquisitions because the business was "about an Australian base to build global brands" he did confirm that Rosemount's joint venture with Mondavi, the California producer, would go ahead.
The venture will produce two lines of wines, one from the US, which will be distributed globally by Southcorp and one from Australia, which will be distributed by Mondavi's network.
As of yet there is no news on what the Rosemount/Southcorp operation will be
called in the future. At present it will remain under the Southcorp banner,
but Lambert said many in the company had expressed a dislike for the name, as
it didn't present a friendly image.
A new name, he said might include the use of two or three of the company's lead brands.
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