Word: domecq
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...Ricard had overreached, Bruce Carbonari, CEO of Fortune Brands (which was trumped in the Absolut auction), claimed that the price for V&S would not provide an "appropriate return" for shareholders. Yet le patron remained unperturbed. Three years ago, the company leveraged itself heavily to acquire Britain's Allied Domecq, a $13 billion deal that doubled Pernod Ricard's size at a stroke and added such brands as Beefeater gin, Ballantine's whisky and Mumm sparkling wines to the company's drinks cabinet. But the debt was speedily reduced to manageable levels, allowing Pernod Ricard...
...acquisition last June by Telecom Italia of the 44% stake in mobile phone company Telecom Italia Mobile it didn't already own, and the $22 billion purchase by Italian bank UniCredito of Germany's Bayerische HypoVereinsbank. Other major deals included Pernod Ricard's acquisition of British drinks firm Allied Domecq, and a continuing three-way fight for control of that bastion of shareholder capitalism, the London Stock Exchange. According to Morgan Stanley, the number of deals last year with a volume of $1 billion or more doubled from 2004, while the number of transactions exceeding $5 billion more than tripled...
Pernod Ricard's recent $17.1 billion acquisition of most of Britain's Allied Domecq makes the Paris-based company a competitive No. 2 operator in wine and spirits worldwide, behind London's Diageo, with sales of 77 million cases. But it's not about figures, says...
Chugging two-thirds of Allied Domecq (Fortune Brands downed the rest, for $5 billion) will add 65% more to Pernod Ricard's global revenues, reaching about $7 billion in 2004 sales. Says Bord: "Premium is growing in all categories" --one reason Pernod Ricard decided to ride the industry's wave of consolidation and, in the process, doubled its U.S. sales. Pernod thinks it can lift sales growth of the acquired brands--including Malibu, Kahlua, Ballantine's and Beefeater--from 3% to match the 9% rate Pernod is getting out of the rest of its portfolio...
That's quite a leap in the booze business, but Pernod Ricard is no stranger to the power of consolidation. It turned sales around for Chivas Regal and Martell, up 9% and 7%, respectively, since acquiring Seagram in 2001. The degree of difficulty is greater now though, since Allied Domecq's brands and distribution channels are comparatively stronger than Seagram's were. "I don't think they'll get anywhere near the level of growth they got with the Seagram business," says Deutsche Bank analyst Graeme Eadie, citing dragging sales of Kahlua liqueur, Ballantine's scotch and Beefeater...