Campari now have up to €30 billion (US$32.5 billion) in ‘equity-funded firepower’

Durrant Pate/Contributor

The owner of Jamaica’s most popular rum company, J. Wray & Nephew (JWN) is being predicted to make a major acquisition or merge with an international spirits company that has exposure to the US and Asia.

The Italian group, Campari, which bought JWN for US$415 million in 2012, is now looking to buy or merge with another international spirits company that has exposure to the US and Asian markets, analysts at Deutsche Bank have predicted. This, is as a result of Campari now having up to €30 billion (US$32.5 billion) in ‘equity-funded firepower’ after major shareholder, Lagfin secured additional voting rights on August 4.

With this spending power, Deutsche Bank believes Campari ‘continues to actively consider deals’. The German bank reports that Campari is interested in companies that have premium brands and are exposed to the US and Asian markets.

Three companies possibly on Campari’s radar

After assessing the top 50 spirits companies, Deutsche Bank predicts that three firms could be on Campari’s radar. They are Edrington, Rémy Cointreau and William Grant & Sons.

The bank claims that these companies meet the nine-point criteria that Campari could be considering, including having an enterprise value of at least US$5.5 billion and less than €30 billion and having 30% of global sales in premium-and-above brands. Analysts highlighted three other companies that have eight of the attributes: Jose Cuervo Tequila owner Proximo Spirits, French conglomerate LVMH and US drinks firm Brown-Forman.

Glasgow-headquartered firm, Edrington produces Scotch brands The Macallan, Highland Park and Famous Grouse, and Brugal rum. Edrington is owned by a charity, The Robertson Trust, while Japanese spirits giant Suntory has owned a 10% stake in the Highland Park maker since 2020. 

Edrington has a 70% stake in The 1887 company, which controls single malt brand The Macallan, while fellow Scottish spirits firm, William Grant owns the remaining 30%. Founded in 1887, William Grant’s portfolio includes Scotch brands Glenfiddich and Grant’s, Hendrick’s Gin and Tullamore Dew Irish whiskey.

The publicly-listed French group, Rémy Cointreau, the world’s third-largest Cognac maker, was a ‘good strategic fit’ due to its exposure in the US and China, and ‘significant inventory assets’. However, it warned that majority shareholders ‘may be an issue’ with Orpar controlling 47.6% of voting rights.

Deutsche Bank notes that the French firm has often expanded into other alcohol categories (such as American whiskey), suggesting an interest in diversification. In November 2022, the CEO of Campari Group said the company was open to further acquisitions in American whiskey and “very interested” in growing its Mexican portfolio.

Campari has completed 41 transactions since 1995, including the purchase of J. Wray & Nephew to reach a total value of €3.8 billion (US$4.1 billion), Deutsche Bank said. Five of these deals were made in the past year, including the purchase of Kentucky’s Wilderness Trail Distillery.

Campari Group’s portfolio includes Wild Turkey Bourbon, Skyy Vodka, Grand Marnier liqueur, Campari liqueur, and Jamaican rum Appleton Estate. Campari’s current share price ‘fails to reflect the company’s sector-leading growth or the opportunity to create value with Mergers & Acquisitions but the company has seen organic net sales increase by 14.2% for the first six months of 2023, led by apéritifs, Tequila and premium Bourbon.