UK: Stock Spirits eyes IPO as springboard to spirits buys
Chris Heath became CEO at Stock Spirits in 2009
Stock Spirits will use its recently-announced initial public offering (IPO) to target acquisitions in new Central and Eastern European markets, the company's CEO has told just-drinks.
Earlier today (26 September), parent company Oaktree Capital, announced that it will float a minimum of 25% of its spirits division on the London Stock Exchange next month. The firm said in a statement that it would use its proceeds from the move to “repay a portion of its indebtedness”.
Speaking to just-drinks after the announcement, chief executive Chris Heath said that Stock would look to make company purchases once the IPO had completed.
“While the IPO will give some funds back to Oaktree,” he said, “for us it will put our balance sheet in the right shape so that we can then make meaningful acquisitions going forward. The core part of our strategy is to become the leading spirits business in the whole region, not just in the markets that we're in today.”
When asked which countries appealed most, Heath said: “Everything to the north and east of us (in Czech and Poland) until you get to Russia”.
Heath noted, however, that a move for spirits producer Central Eastern Distribution Corp, which also operates in the region and was acquired by Russian Standard earlier this year, would have been prohibitive for Stock. “We wouldn't have been allowed to buy CEDC due to competition rules,” he said. “That would have taken us well over 50% market share (in Poland), so that was never on the radar for us. We'd be more interested in the other countries in Central Europe.”
On reports in recent years claiming that Oaktree was close to selling off Stock, Heath added: “A sale always needs a willing seller and a willing buyer at the same price. There have been discussions and they didn't get to the same price. Oaktree know our business, they know what we can do, and they know that there's long-term growth potential here. We've been very happy with the support that we've had from Oaktree and the fact that they only want to sell down part of the business is a positive for us.”
Oaktree will retain a “significant stake” in Stock after the flotation, although Heath is not aware what size that stake will be. “Oaktree will have a representative on the board” he said, “but they certainly won't control the company.”
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