Campari today (10 January) revealed the details of a share-and-bond offer carried out to fund the acquisition of Cognac business Courvoisier.

The Italy-based spirits group has raised €1.2bn ($1.31bn), some of which the Aperol owner said will “allow further expansion”.

Campari, controlled by the Garavoglia family through the holding company Lagfin, has placed shares at €9.33 each, generating around €650m.

The new shares give investors the same rights, including on dividends, as the existing ordinary shares. Campari said the new tranche of shares represents 5.6% of its issued and outstanding ordinary share capital.

The company said its issue of convertible bonds will raise €550m. The bonds have a maturity of five years. If the bonds are converted, the total issue will be 44.5m shares representing 3.6% of Campari’s issued and outstanding ordinary share capital.

In a stock-exchange filing, Campari said today the “net proceeds” would be “used to fund the acquisition of Courvoisier, announced on 14 December 2023 and to strengthen its balance sheet in order to allow further expansion”.

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By GlobalData

When Campari announced its move for Courvoisier last month, the group said it would put up $1.2bn, with an additional payment of a maximum of $120m expected to be made in 2029.

At the time, Campari said the deal, which is expected to be finalised this year, was to be funded via a bridge loan of €1.2bn ($1.32bn) adding it was “also constantly evaluating various alternatives, in the context of evolving market conditions, to potentially fund the transaction with a mix of debt, cash and equity or equity-like instruments, with timing and amounts yet to be determined”. The Appleton Estate rum maker will no longer use the loan.

Why Campari can revitalise Courvoisier

In a note to clients today, AllianceBernstein analyst Trevor Stirling said the bond-and-share issue dilutes Campari’s earnings per share by 9.6%, “which will be partly offset by Courvoisier’s profit contribution”.

He added: “The final net impact of the deal is very dependent on where Courvoisier’s US profits stabilise. However, our best estimate today is that it will be mid-single-digits dilutive to 2025 earnings.”

When Campari unveiled the deal, it provided sales data for Courvoisier from Beam Suntory, the business’ current owner.

Campari said the Courvoisier business, which also includes the Salignac brand, made net sales of $249m in 2022. The asset’s contribution after A&P was $78m, Campari added.

The group also provided data for the first ten months of 2023. The Courvoisier business’ net sales in the period to 31 October fell 33% year on year to $148m. Contribution after A&P was $37m, though Campari did not disclose a comparable figure for the ten months to 31 October 2022.

“This performance is impacted by recent market-driven trends such as normalising consumption in the US after peak post-Covid sales and destocking at wholesaler level, in-line with the wider Cognac industry,” Campari said in its statement at the time, adding the US, China and travel retail account for around 75% of the total category.

Campari share price dips after Courvoisier buy but CEO “bullish” about Cognac potential

According to the Beam Suntory data provided by Campari, the US accounted for around 60% of Courvoisier’s net sales in the 2022 fiscal period. 

AllianceBernstein’s Stirling added today: “We like the deal as we believe Cognac is a structurally attractive category, despite the boom and bust in the USA and the recent political headwind in China. We estimate Campari is paying 17 times 2022 EBITDA for Courvoisier. In Courvoisier, Campari are acquiring the fourth global house in an industry that benefits from attractive growth prospects, high margins and barriers to entry. Campari has a strong track record of growing its brands and has the ingredients to do their magic on Courvoisier.”