The Art of the Deal Involves Some Cold Cash
By Chuck Sudo in Food on Nov 13, 2007 11:21PM
In August we wrote about the possibility of Deerfield-based Fortune Brands Inc. losing the marketing rights to Absolut Vodka when the Swedish government eventually puts the state-owned distillery up for sale. At the time, it was a very strong possibility that Fortune Brands would lose the rights to a competitor as they were just beginning to pay down the debt accrued from the acquisition of 25 major brands from Allied Domecq.
If Fortune Brands does lose Absolut - their best-selling vodka brand - they won't be letting go without a fight. Crain's reports today that the sale of Fortune Brands' wine portfolio to Constellation Brands is an indicator that they intend to be a major player in the bidding war for Vin & Sprit, which some analysts estimate can reach as high as $8 billion. The $885 million deal gives (which Fortune Brands believes will give them $840 after taxes) will give them some seriously needed cash when the bidding process begins. Fortune Brands currently has $285 million in cash assets. Purchasing Absolut outright allows them (or any prospective new owner) to set the market price on the product, and increase the "reward" margin to the buyer.
Again, these are some serious numbers being tossed around to discuss the purchase of a vodka that isn't in our top three choices at a bar.
Image via Absolut Ad.