Pernod buys Absolut Vodka business for €5.63bn

by Staff, Brand Republic 31-Mar-08, 09:05

LONDON - Drinks giant Pernod Ricard has won the race to buy Vin & Sprit Group, the owner of Absolut Vodka, from the Swedish government after a four month auction.

Absolut, which is one of the world's top vodka names, will join Pernod Ricard's portfolio of premium brands, which include Chivas, Ballantine's, Beefeater, Mumm, Perrier-Jouet, Jacob's Creek and Montana.

The acquisition also gives Pernod control of brands such as Cruzan rum and another vodka brand Level, which are both popular in the US, as well as entry into the Nordic market. In addition, it will end the distribution of rival Stolichnaya by Pernod Ricard.

However, the prize is Absolut Vodka which sells a total of 11m cases a year, with 5m of those sold in the US.

The acquisition boosts Pernod Ricard's market position significantly in the US, raising it from fourth place to second with a 14% share.

Pernod beat a strong field of contenders to bag V&S, including Swedish private equity firm EQT and Future Brands, which distributes Absolut in the US as part of a joint venture with V&S.

The deal with Fortune Brands is due to run until 2012, although Pernod will have control of marketing

V&S will pay the Swedish government a dividend of €85m (£67.64m) as part of the deal, which should be completed during the summer.

Patrick Ricard, chairman and CEO of Pernod Ricard, said: "The acquisition of V&S by Pernod Ricard is a fantastic opportunity and represents our third transformational acquisition since the Seagram and Allied Domecq transactions.

"Absolut is an exceptional brand. Its integration within our portfolio of premium brands combined with the strength of our worldwide distribution network paves the way for outstanding growth prospects. We become thus the co-leader of the global wine and spirits industry."

It is the third major acquisition that Pernod has made in recently, having bought part of Seagram in 2001 and Allied Domecq in 2005.

The €5.63bn sale brings to an end a four month auction that began when the Swedish government put the drinks company up for sale in December.

Pernod said it expected to make savings of €150m a year once distribution agreements with Future Brands and other distributors, including Maxxium, have concluded.