Remy Cointreau exits Maxxium distribution network
With Vin & Sprit about to be gone, Remy Cointrau thought it best to come to an agreement with the other shareholders of Maxxium (The Edrington Group, Beam Global Spirits and Wines and Vin & Sprit / Pernod Ricard) about its own exit from the Maxxium distribution network in March 2009.
According to the terms of the agreement, Remy Cointreau will pay Maxxium an indemnity fee of EUR 224 million on 28 March 2009.
The 25 percent equity stake held by Remy Cointreau in Maxxium will be redeemed for EUR 60.4 million on 30 March 2009, after the approval of Remy Cointreau’s banks has been received.
As Remy Cointreau exits the Maxxium distribution alliance it helped set up, the French company’s stock-market valuation looks more inflated than ever, observers have argued.
The premium over rival spirits suppliers is justified only if you believe the controlling Cointreau and Heriard-Dubreuil families will soon take the company private, or sell out of the business.
But there’s little to suggest either move is imminent, even though the Remy missed out on the sector’s consolidation in recent years.
That has left Remy hampered by lack of scale compared with larger and far more acquisitive European rivals such as Pernod Ricard and Diageo.
As for the prospect the families might take the company private – well, Remy’s stock is hardly cheap. It is trading at 17 times forward earnings, ahead of Diageo’s 15 times, Pernod’s 14 times and Davide Campari’s 12 times, it was reported.
Even if the two families intend to sell their 58 percent stake in Remy Cointrau sometime in the future - Remy like Bacardi remains a perennial favourite for M&A speculation - investors will have to be patient to reap any acquisition premium. The families did not feel inclined to sell last year when Remy’s share price hit EUR 57, when credit was cheap and potential buyers hardly scarce.
The situation today is less than ideal for any potential acquirers needing to borrow to finance a likely EUR 2 billion-plus deal - and the sellers. The stock trades around EUR 35, a hefty 35 percent discount to last year’s peak.
