Cash-rich Campari maker eyes hidden gems
November 13, 2009
By Andrew Cleary London
DAVIDE Campari-Milano, Italy's biggest distiller, aimed to buy "hidden gems" to reap distribution savings in markets where it already operates, chief executive Bob Kunze-Concewitz said yesterday.
"We're always window shopping, but we will get more serious" about acquisitions next year, he said. "Right now we don't owe any bank any money. We're cash rich".
The maker of the Campari aperitif has repaid bank loans used for the $581 million (R4.2 billion) purchase of the Wild Turkey bourbon brand in May by issuing bonds, placing it in a stronger financial position, said Kunze-Concewitz.
Campari would be able to cut debt to 2.2 times earnings before interest, tax, depreciation and amortisation (Ebitda) "at some time in 2010" and would then begin to consider acquisitions up to "quite a few hundreds of millions of euros", Kunze-Concewitz said.
Campari, which also makes Skyy vodka, surged to a two-year high in Milan yesterday after reporting a 15 percent increase in nine-month earnings. It also said pressure from wholesalers reducing inventory levels had eased.
Campari bought Wild Turkey, the best-selling premium bourbon in the US, from Pernod Ricard to expand in the world's most-profitable spirits market. Kunze-Concewitz said Campari had not seriously considered any further purchases since, though that would change next year.
"We're looking for hidden gems, either long-established and now neglected brands or those which haven't hit the radar yet," he said.
"Our priority is to buy assets to get synergies in our existing markets."
Under the terms of existing debt covenants, Campari could stretch its net debt to 3.5 times Ebitda, putting a ceiling on how large any acquisition could be, he said. - Bloomberg
|
|
