Castle Brands; Jefferson's bourbon

Pernod Ricard to acquire Castle Brands for $US223 million

August 28, 2019
By Alana House

Pernod Ricard’s thirst for bourbon acquisitions has seen it enter into an agreement to buy Castle Brands for approximately $US233 million.

Castle owns spirits including Jefferson’s bourbon, Brady’s Irish Cream and Goslings Rum.

In Q1, volume sales of Jefferson’s Bourbon were up by 4.8% to 22,250 cases. The brand’s sales for the 12 months to the end of June 2019 were 89,500 cases, an increase of 14.1%.

According to the Distilled Spirits Council, American whiskey volumes were up 5.9% to 24.5 million cases (+1.4 million cases) in 2018, with revenues up 6.6% to $3.6 billion (+$224 million).

John Glover, executive vice president and chief operating officer of Castle Brands, said earlier this month: “Jefferson’s is the only leading small batch brand to command an average price greater than US$50 per bottle and the only leading small batch Bourbon not owned by a major spirits company.”

Pernod Ricard, through a subsidiary, will acquire all of the outstanding common stock of Castle Brands for $1.27 per share in cash, plus the assumption of debt, through a cash tender offer followed by a merger.

Under the terms of the merger agreement, which has been unanimously approved by the Castle Brands Board of Directors, Castle Brands shareholders will receive $1.27 in cash for each outstanding share of Castle Brands common stock they own, representing a 92% premium to Castle Brands’ closing share price on August 27, 2019, and a 109% premium to the 30-day volume weighted average share price through such date.

Alexandre Ricard, Chairman and Chief Executive Officer of Pernod Ricard, said: “Through this acquisition we welcome this great brand portfolio, in particular, Jefferson’s bourbon whiskey, to the Pernod Ricard family.

“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 whiskies 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.”

Castle Brands; Jefferson's bourbon

“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,” said Richard J. Lampen, President and Chief Executive Officer of Castle Brands. “We are confident that this transaction, upon closing, will deliver immediate and substantial cash value to our shareholders.”

The transaction is expected to close in the fourth quarter of 2019.

Bourbon a winner in FY19 results

Pernod Ricard’s reported sales for FY19 totalled €9,182million, with organic growth at 6%.

Specialty Brands enjoyed 12% “continued dynamism”, particularly for Lillet, Altos, Monkey 47, Ultra premium Irish Whiskey range and Smooth Ambler bourbon.

Pernod Ricard also announced it would spend $US150million building China’s first-ever malt whisky distillery at Emeishan, Sichuan.

“It’s a long-term project, and we expect to start distilling in 2021, and I look forward one day to be able to taste this great single malt Chinese whiskey with all of you,” said CEO Alexandre Ricard.

Ricard also pointed to the success of the company’s Irish whiskey portfolio, particularly Jameson.

“Jameson, which represents a little bit less than 30% of our sales, is growing, let’s say, high single to low double-digit value, in particular, with an acceleration of our superpremium variant with Black Barrel,” he said.

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