Founded back in the 1860, the Italian spirit producer is going to complete another acquisition, following the strategic pattern that it has recently undertaken. As a family business still in the hands of the Garavoglia family, the group has been experiencing years of strong organic and external growth, counting over €1.5bn spent in M&A activity under the new CEO appointed in 2007, Mr. Concewitz, and developing a proper reputation of “acquisition machine”. As of today, Campari is headquartered in Italy (Sesto San Giovanni), where about a quarter of the sales are accounted for, and has concluded the FY 2015 with net total sales amounting to €1,656.8 million (+6.2% with respect to the previous one). Company’s net profit has been of €176 million, with a reported return on sales of 18.7%, increasing by 2.4% compared to FY 2014. Campari is now the sixth largest producer in the industry, which is a fairly satisfactory result taking into consideration that the global spirits business is still relatively fragmented with respect to the beer-brewing one, in which the top four players retain half of the market. The real “step” for the company took place in the 1990s when, faced with the consolidation of few important players in the game, the company decided to join the race for market size and to start building a competitive portfolio on a global scale. From that moment on, it has been involved in some notable transactions, among the others the acquisition, in 1998, of a minority holding Sky Spirits LLC as well as the world distribution rights for their brand “SKYY VodkaSkyy Spirits”. Then, in 2001, the company completed its IPO on Piazza Affari, priced 31€ per share and with an offering three times oversubscribed. In 2014, the company fully acquired Fratelli Averna SPA, Sicilian spirit producer and owner of the brand “Averna”, second best selling bitter in the country. The operation assured Campari full access to a new portfolio of brands, such as “Braulio”, gaining a primary role in the Italian market. Moreover, the CEO commented on the acquisition highlighting its strategic significance in terms of positioning in the key European central markets, like Germany. The target company had reported growing sales in FY2013 and for the purpose of the operation its equity value has been estimated of €98 million.
In March 2016, Campari has officially announced the achievement of a deal to buy “Societe Des Produits Marnier Lapostolle SPA”: the transaction is certainly among the biggest for the group over the last decades, with a target’s enterprise valuation of 652 million. The group has reported the immediate acquisition of shares representing 17.19% of the SMPL’s capital in full ownership, 1.06% in bare ownership and 1.54% in usufruct. Moreover, Campari is going to launch a public tender offer as soon as the Antitrust Authority releases its permission, aimed at assuring the company the full control over the target and at delisting the French company from the Parisian Stock Exchange. Overall the market seems to have reacted positively on the deal, having the stock price steadily growing since the announcement, building on the following Monday a 5% gain. The Target company had concluded FY2015 with net sales for €152 million and an EBITDA of €30.8 million.
The current CFO, Paolo Marchesini, has declared himself confident that starting from July the group should be in the position to consolidate the operation. In case the offer is not concluded with Campari owning 50.01% of the shares, the deal presupposes that the members of the Marnier Apostolle family, current shareholders of the company, will have to sell the Italian group their shares before 2021, through a call and option system. The offer has been priced at €8.05, including a 60% premium with the respect to SMPL’s quotation before the announcement.
According to Mr. Concewitz, the acquisition is a “perfect fit with our external growth strategy in terms of brand profile, distribution and financial framework. We add a premium and distinctive brand to our global priorities portfolio, thus driving richer product mix and we further consolidate our position as the leading purveyor of premium liqueurs”. Besides, it perfectly suits the company’s intention to exploit the trending revival of classic cocktails, particularly strong in the US market (already representing 40% of the total net sales). In addition to that, the deal provides Campari the exclusive worldwide distribution rights for the “Grand Marnier Spirit” portfolio, which is currently globally shared with the champagne maker Moët Hennessy, the French producer Diageo and several independent wholesalers: “controlling distribution is nowadays key in our industry”. As last remark, part of the arrangement envisages the transfer to the Italian distiller of the ownership of an historic villa in the French Riviera: “Villa les Cedres” is situated in the peninsula of Saint Jean Cap Ferrat, where local experts of real estate properties have estimated the average square meter price to be around €200,000. Campari has already announced its intention to sell the property and share the proceeds with the current shareholders’ family, even tough it has also acknowledged that the sale may not happen quickly.
Bank of America Merrill Lynch and Philippe Villin advised Campari on the transaction, along with Brandford Griffith Associates and Pedersoli who acted as legal advisors.