Pernod targets Bourbon market with Castle Brands buy
Pernod Ricard’s acquisition spree has continued with the announcement of the French group’s “definitive agreement” to purchase US spirits firm Castle Brands for US$223 million.
Castle Brands is the publicly-listed, New York-headquartered owner of the Jefferson’s Bourbon brand, Goslings rum, Knappogue Castle Irish whiskey and others.
Pernod Ricard will acquire all outstanding common stock in Castle Brands for US$1.27 per share in cash, representing a 92% premium on the firm’s closing share price on 27 August. The cash tender offer will be followed by a merger.
The move marks Pernod Ricard’s continued expansion into the American whiskey segment, following the announcement of its acquisition of the Texas-based Firestone & Robertson Distilling Co earlier this month, Kentucky distillery Rabbit Hole in June this year and West Virginia-based Smooth Ambler in 2017.
This year, the group has also bought the Malfy Gin brand, South African spirits producer Inverroche Distillery, and a 34% stake in Myanmar whisky joint venture Seagram MM Holdings.
“Through this acquisition we welcome this great brand portfolio, in particular, Jefferson’s Bourbon whiskey, to the Pernod Ricard family,” said Alexandre Ricard, chairman and CEO of Pernod Ricard, the world’s second largest distiller.
“Bourbon is a key category in the US, which is our single most important market. This deal aligns well with our consumer-centric strategy to offer our consumers the broadest line-up of high-quality premium brands.
“As with our American [whiskeys] Smooth Ambler, Rabbit Hole and TX, we would provide Jefferson’s a strong route to market and secure its long-term development, while remaining true to its authentic and innovative character.”
Richard J Lampen, president and CEO of Castle Brands, added: “We are very pleased to reach an agreement with Pernod Ricard, which is the result of months of planning and deliberation by our board of directors.
“We are confident that this transaction, upon closing, will deliver immediate and substantial cash value to our shareholders.”
Once the tender offer is completed, Pernod Ricard will acquire all shares not in the original acquisition through a second-step merger, offering remaining shareholders the same price per share.
The transaction, which is subject to customary conditions, is expected to be completed in the fourth quarter of 2019. It is part of Pernod Ricard’s ‘transform and accelerate’ three-year strategic plan for growth.
In fiscal 2019, Castle Brands’ net sales increased by 6.6% to US$95.8m. Today (29 August), Pernod Ricard announced its full-year financial results, which saw an organic sales growth of 6% to €9.182 billion (US$10.17bn).