FRANCE: Vranken tipped as buyer for Pommery
The expanding Champagne company, Vranken Monopole SA, is thought to be close to acquiring the Pommery Champagne business recently put on the market by drinks and luxury goods company Moet Hennessy Louis Vuitton (LVMH). It is not clear what Vranken might be paying for Pommery but initial estimates put a purchase price of €230 to €300m on the business.
Informed observers have suggested an announcement will be made within the next few days though neither Vranken nor LVMH would comment on the speculation.
The deal is expected to include the Pommery brand name, the winery and stocks but LVMH would retain the majority of Pommery's Champagne vineyards.
The sale is consistent with LVMH's stated intentions to concentrate on "star brands". It saw net profit for 2001 reduced to €10m after taking provisions of nearly €1 billion aimed at returning loss-making retail operations to profit. Operating profit at the LVMH wines and spirits division fell by 5.6% in 2001 to €676m from €716m a year earlier.
Formed in 1976, Vranken is a new company in Champagne terms but under CEO, Paul-Francois Vranken, it has expanded significantly, buying Lafitte in 1983 and Heidsieck Monopole in 1996. The company has also acquired interests in the port and whisky sectors. Vranken's sales in 2001 rose by 9.2% to €138m in spite of the post-Millennium slump in the Champagne market.
However, analysts have suggested that Vranken's large debt and small market capitalisation of EUR88 million - only 32% of the company is publicly floated - means the acquisition would not be easy to negotiate. Vranken's debt to equity gearing ratio is currently 222%. A further issue of capital is thought likely while other analysts suggested a private equity investor might be brought in as a partner in the venture.
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