Emperador buys Mexico's largest brandy business

Emperador Inc. has bought the Domecq brandies and wines of Pernod Ricard in Mexico, Emperador said in a statement on Monday.

The transaction includes the brand portfolio of Mexican brandies Don Pedro, Presidente and Azteca de Oro as well as the winery related to the production of Mexican wines in Ensenada, together with the relevant inventories related to the Domecq brands in several markets that include Spain, United States, Belgium and the Netherlands.

In a separate statement late last week, Pernod said an agreement was signed between Pernod Ricard and Bodega Las Copas for the sale Domecq brandies and wines. Bodegas Las Copas is a 50-50 joint venture between Grupo Emperador Spain and González Byass.

According to a source familiar with the transaction, but is not authorized to be quoted by the media, the transaction price was based on "working numbers by Pernod  ... but remains undisclosed at this point in time."

The source noted "they are still in the process of working out the final valuation of the transaction."

The disposal is in line with Pernod Ricard’s strategy to simplify its portfolio for growth and focus on its priority spirits and wines brands. It reinforces the presence of Bodega Las Copas in the global brandy category.

The acquisition gives Emperador access to the brandy market in Latin America, with a population of 600 million, especially Mexico where Domecq brandies have a 50 percent share of the market, he company claimed.

“This recent acquisition fits perfectly with our strategy to fortify Emperador’s status as the No.1 brandy company in the world,” Emperador President Winston Co said in the statement.

Emperador bought Beam Suntory's brandy and sherry business in Jerez for P13.8 billion in cash last year.

In 2014, it completed the acquisition of UK-based Scotch whiskey maker Whyte & Mackay Group Limited and its subsidiaries for P31 billion.

"It's good to know that they are at the forefront of cross-border acquisitions, and in fact essentially promoting the Philippine brand across the globe," Hans B. Sicat, President and CEO of the Philippine Stock Exchange, told GMA News Online on the sidelines of a press conference in Makati City on Monday.

Emperador is the liquor arm of the Alliance Global Group.

"They'll obviously improve their own critical mass and help establish a wider menu of brand names known not just globally but also very strong in the region. In Mexico,  it's well known," Sicat said.

"The entry into Mexico will strengthen Emperador's global position through Presidente brandy, which is Mexico’s No. 1 locally produced brandy," Richard Lañeda, senior analyst of COL Financial Group said.

The closing of the transaction is subject to customary conditions, including its clearance by the Mexican Anti-Trust authorities, and is expected to take place before the end of the fiscal year 2016-2017, it said.

Pernod Ricard was advised in the transaction by BBVA bank and Cuatrecasas Spanish law firm. Bodega Las Copas was advised by bvy the Spanish law firm Uría Menéndez and the Mexican law firm Galicia Abogados. —With Jon Viktor Cabuenas/VDS, GMA News