Gruppo Campari has offloaded several brands in the last year

Gruppo Campari has offloaded several brands in the last year

Following the release of third-quarter and year-to-date results yesterday, analysts appear to be largely impressed with a "well-run" and "focused" Gruppo Campari

In the client notes that succeeded the group's numbers, talk turned to acquisitions. It sounds as though Campari could be about to splash some serious cash.

Jefferies analyst Edward Mundy says the company has a wallet fat enough for another purchase the size of Grand Marnier. Campari bought the Cognac-based orange liqueur's owner, Marnier Lapostolle, last year in a transaction worth EUR684m (then-US$761.4m).

"With net debt to EBITDA <2x at year-end," Mundy writes, "the company has acquisition firepower for a deal as large as Grand Marnier."

Societe Generale analyst Laurence Whyatt also believes Campari could be gearing up for an acquisition - and he predicts it will take place sooner rather than later. "Following recent disposals," he says, "the leverage ratio is set to be below 2x. Campari has a strong track record of value-enhancing acquisitions, and we continue to anticipate a deal within the next 12 months."

The group has a healthy list of "recent disposals": In June, it completed on its strategy to exit the still wine category, with this sale of Château de Sancerre to Maison Ackerman. The move followed the earlier disposal of its Chilean wine operations. Then, in July, the group confirmed speculation that it was offloading the Carolans Irish Cream and Irish Mist brands to Heaven Hill Brands, for US$165m. Finally, last month, Campari announced more activity in its brand consolidation programme, selling off almost all of its remaining soft drinks interests to Royal Unibrew, for $94m.

We see now where the money is coming from.

So, what might Campari be in the market for? When it comes to speculating about a potential target, Mundy points out that "M&A has been highly focused, with a preference for buying dusty, unloved brands rather than trophy assets". 

It looks like it's time to dig around at the back of the drinks cabinet and see what's left.

Gruppo Campari year-to-date 2017 by region - results data