Pernod Ricard’s Managing Director, Gilles Bogaert, confirmed this week that large acquisitions are not part of the company’s agenda until at least next summer. This came after speculation that Pernod was going to make a bid for the spirits business of Fortune Brands. Instead, they are focused on cutting current debt (9 billion euros) in order to meet their target set for June 2012 and regain its debt investment grade rating.
Fortune is planning to spin off its home and security business on Oct 3, and its spirits company Beam (which owns brands like Courvoisier cognac and Jim Beam bourbon) will start trading on Oct 4. Analysts expect Beam to make earnings before interest, tax, depreciation and amortisation (EBITDA) of around $700 million in 2011.
Pernod Ricard’s main rival Diageo is now expected to bid for Beam, but would have to link up with another company, possibly privately-owned Bacardi, to get around competition issues. Whether Diageo is interested in owning some of Beam’s smaller and less profitable brands remains to be seen.
Last week Pernod reported sales growth of 7 percent and operating profits of 8 percent in its financial year that ended in June this year. There remains concern, however, about the company’s level of debt.
Story from LSE.