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Pernod Ricard tasting possible sale of wine unit: Bloomberg
Posted on Thursday, 14 March 2019 12:08
French beverage company Pernod Ricard is weighing a potential sale of its wine division, just three months after activist investor Elliott Management disclosed a stake, Bloomberg reported.
Citing people familiar with the matter, the news provider added that the group, billed as the world’s second-largest distiller, is in preliminary discussions regarding a divestment.
However, as talks are at an early stage, Pernod Ricard may yet decide to retain the business, the sources noted, asking not to be identified as the matter is private.
The unit comprises Australia’s Jacob’s Creek, Spain’s Campo Viejo, New Zealand’s Brancott Estate and California’s Kenwood and has annual sales of around USD 500.00 million, according to its website.
Pernod Ricard also manages international brands such as Absolut Vodka, Jameson Irish whiskey, Malibu rum, and Beefeater gin.
When contacted by Bloomberg, a spokesperson sent an email to say as part of the company’s policy it will not comment on rumours or speculation.
Interestingly, news of the potential sale comes just three months after Elliott Management, a well-known activist investor, disclosed a 2.5 per cent interest in the group through an EUR 1.00 billion investment.
One insider with knowledge of the timing told Bloomberg that Pernod Ricard began exploring options for its winery business prior to being targeted by the hedge fund.
Following the investment, Elliott called for EUR 500.00 million-worth of cost cuts at the company, which is second in the global spirits sector to UK-based Diageo.
However, Pernod Ricard rebuffed reports that it was under external pressure and said its intention to continue its dynamic management of its portfolio is still in place.
Shares in the Paris-headquartered group increased slightly to EUR 156.85 at 10:52 today, giving the business a market capitalisation of EUR 41.66 billion.
Pernod Ricard, which has around 18,500 employees, recorded a 7.8 per cent increase in net sales to EUR 5.19 billion for the six months to 31st December 2018.
In the same timeframe, net profit from recurring operations rose 11.0 per cent to EUR 1.11 billion, while the group continued deleveraging net debt to earnings before interest, taxes, depreciation and amortisation at 2.6x.
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