Intoxicating rumours of a €90 a share cash bid for Remy Cointreau did the rounds, lifting the Remy Martin cognac-to-Mount Gay rum group 3 per cent to €67.
Rumours have been rife recently that Brown-Forman, the US maker of Jack Daniel’s whiskey and owner of the Southern Comfort and Tequila Herradura brands, had approached the Heriard Dubreuil family, which owns a controlling 60 per cent stake in Remy, with terms on a ‘friendly’ cash bid. It was apparently sent away with a sozzled flea in its ear, but industry experts still believe underperformer Remy’s days of independence are definitely numbered.
Remy’s shares were trading at €96 a year ago, but plummeted to a low of €53 following a profits warning. The group has been hurt by a Chinese government crackdown on extravagant spending that hit sales of spirits. Sales of cognac fell 32 per cent in the final quarter of last year, following a 30 per cent drop in sales during the third-quarter. Cognac makes up 80 per cent of Remy’s operating profits, and China was 50 per cent of that total.
Brown-Forman’s reported interest in Remy could flush out other predators. Diageo’s (24p better at 1904.5p) chief executive Ivan Menezes earlier this year lost out on US bourbon producer Beam, which was swallowed by Japanese whisky maker Suntory in a £9.6billion deal. He could step in for Remy to prevent yet more famous brands from falling into rivals’ hands and to consolidate the group’s position as the world’s number one spirits group by sales.
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