Campari Group has committed to acquire Courvoisier cognac from Beam Suntory

Campari Group announced it has entered into exclusive negotiations with Beam Suntory, Inc (the ‘Seller’) and granted thereto in such context a put option, with a view to acquire 100% of the outstanding share capital of Beam Holding France S.A.S., which holds 100% of the share capital of Courvoisier S.A.S., owner of Courvoisier (the ‘Target’).

Deal rationale

Bob Kunze-Concewitz, Chief Executive Officer Campari Group: ‘We are very pleased to acquire a top four historical cognac house, Courvoisier with great latent equity and highly acclaimed expressions. The addition of Courvoisier cognac to our portfolio of global priorities is a rare and unique opportunity to expand our premium spirits portfolio and cognac offering. By leveraging our heavy cognac expertise at Board and Executive Team level, Campari Group has a fantastic opportunity to reinforce this brand’s credentials as a global icon of luxury, priming cognac to become Campari Group’s fourth major leg along with aperitifs, bourbon and tequila. Concomitantly, we are looking forward to accelerating our premiumisation journey, further enriching our RARE portfolio, the division created to unlock and accelerate the growth potential of a select range of high-end individual expressions in our core premium spirits markets.’

Matteo Fantacchiotti, Deputy Chief Executive Officer Campari Group: ‘In what is the biggest deal in Campari Group’s history, Courvoisier will enable a significant step up in the US while also permitting long-term transformational potential in the strategic Asia-Pacific region. In addition to acquiring a globally recognized brand with strong premiumisation credentials, we have a unique opportunity to expand our cognac production and bottling capacity in France, a core platform of our global supply chain. Our recent investments into business infrastructure and enhanced operation capabilities, combined with Campari Group’s formidable reputation for investing in brands with strong equity and potential for long-term sustainable growth will allow us to unlock Courvoisier’s full potential. We are very excited to further build upon our premium portfolio of brands in the US, simultaneously adding significant leverage into China and the wider Asia Pacific arena, while also expanding the premium innovation platform for our cognac portfolio.’

Greg Hughes, President and CEO of Beam Suntory: ‘We are proud to have nurtured the iconic Courvoisier brand for nearly 20 years, investing in its growth across key global markets and transforming it into a symbol of modern luxury and an industry leader in awards and sustainability. The brand is very well positioned for its next chapter of growth, and we are confident that Campari Group is the right partner to take Courvoisier into the future. This move will allow us to further focus our portfolio on our core areas of strength as we accelerate our global growth ambitions.”

Business overview

Maison Courvoisier was founded in 1828, by Félix Courvoisier in Jarnac, the Charente region of France. Courvoisier is the youngest and most awarded of the ’big four’ historical cognac houses and received the title of Official Supplier to the House of the Emperor by Napoléon III, supplied the royal courts of Europe and was the drink of choice of the Belle Epoque, chosen to celebrate the inauguration of the Eiffel Tower and the opening of Moulin Rouge.

Courvoisier’s signature styles reveal the intricate nuances of the cognac craft which have led the House to become the Most Awarded Cognac House based on 20 top spirits competitions since 2019 and the only cognac house to ever win the coveted ‘Prestige de la France’ title. With its core collection of VS, VSOP and XO which are further reinforced by a premium range of limited editions, Courvoisier has built solid brand credentials across a multitude of versatile liquid styles. The Courvoisier Château serves today as the main headquarters from the brand, but it also hosts a museum, a visitor centre as well as maturing cellars. The Maison tour will bring you to the heart of its history, from Paris to Jarnac and describe the special features of Courvoisier cognacs, complemented by the discovery of an ageing cellar and tastings. For a deeper experience, the premium tour opens the doors of the Courvoisier Château and invites you to delve into the heart of the Courvoisier history and passion. From the visit of unique places such as the Paradis cellar, to tastings and sensorial experience for a privileged moment.

In fiscal year ending 31st December 2022, according to the Seller’s view the Courvoisier business, which includes also Salignac brand [1], achieved net sales of USD249 million, with Contribution After A&P (CAAP) of USD78 million, according to IFRS. For the 10 months to October 31st 2023, according to the Seller’s view, the net sales were USD148 million, with a decline of 33% vs. the corresponding period in 2022, and CAAP was USD37 million. This performance is impacted by recent market driven trends such as normalizing consumption in the US after peak post-covid sales and destocking at wholesaler level, in-line with the wider cognac industry. According to the Seller’s view, the United States is Courvoisier’s largest region, accounting for c.60% of net sales in FY2022, followed by the United Kingdom and China, combined accounting for c. 25% of net sales, while Global Travel Retail accounted for just over 3%.

The acquired business includes an enviable inventory of maturing eaux-de-vie, with a book value of approx. USD365 million as of 31 October 2023, consisting of well-balanced age profiles to support future brand development. Moreover, the acquisition perimeter includes the trademarks as well as comprehensive production facilities consisting of distillation, warehouses, vineyards, a visitor centre and château, blending facilities, ageing cellars and an automated bottling plant.

Acquisition structure and metrics

The fixed purchase price is USD1.20 billion (corresponding to €1.11 billion at today’s exchange rate), on a cash free / debt free basis, and is subject to the customary price adjustment mechanisms. In addition to the fixed purchase price, an additional payment of maximum USD 0.12 billion (€0.11 billion) is expected to be payable in 2029 upon the achievement of net sales target realized in full year 2028. The corresponding Enterprise Value is USD1.32 billion (€1.22 billion at today’s exchange rate) is equivalent to a multiple of c. 17 times the CAAP in 2022. The signing of the transaction is subject to the information and consultation of the French employees’ representatives and the closing of the transaction will be subject to the completion of the appropriate regulatory processes and customary antitrust approvals. The deal is expected to close in 2024.

Acquisition funding

The funding of the acquisition is fully committed via a bridge loan in Euro currency for an amount of 1.2 billion, with a tenor of up to 24 months from closing date, by a consortium of banks composed by Crédit Agricole Corporate and Investment Bank (as global coordinator, mandated lead arranger, bookrunner and underwriter) and Intesa Sanpaolo (Divisione IMI CIB), Bank of America, Goldman Sachs Bank Europe SE and Mediobanca (each as mandated lead arranger, bookrunner and underwriter). Campari Group is also constantly evaluating various alternatives, in the context of evolving market conditions, to potentially fund the transaction with a mix of debt, cash and equity or equity-like instruments, with timing and amounts yet to be determined.

As a result of this contemplated acquisition, assuming a full debt funded transaction Campari Group’s Net debt/EBITDA-adjusted on a pro-forma basis is expected to increase from 2.6 times as of 30 September 2023 to c. 4 times upon the deal closing. A sustained deleverage is expected thereafter, fuelled by positive cash flow generation.

[1] Small VS cognac brand sold in US

Source: Campari Group
Picture: Courvoisier