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Whyte & Mackay sale attracts several suitors, deal could be worth $600M

13 March, 2014

United Spirits’ Whyte & Mackay whisky unit has attracted interest from several drinks makers and private equity firms and is expected to fetch about 350 million pounds, according to sources familiar with the matter.

SPI Group, owner of Stolichnaya vodka, Italy’s Campari and private equity firms Lion Capital and TPG Capital Management are among the interested parties likely to have bid, said the sources, who declined to be identified since the process is private.

The sale was proposed last year by Diageo, the world’s biggest spirits company by revenue, to appease UK regulators concerned that its purchase of a controlling stake in United Spirits would hurt competition in the world’s No. 3 Scotch market behind France and the United States.

The sources said first-round bids had been due earlier this week and second-round bids were due next month.

Whyte & Mackay has about 7 per cent of Britain’s market for blended Scotch whisky, which combines whiskies often made from various grains. It also supplies retailers for own-brand whiskies that account for 18 per cent of a market worth $1.74 billion a year, according to researchers IWSR.

Some of the sources expect Whyte & Mackay’s sale to fetch about 350 million pounds, but others said it could sell for much higher, due in part to a resurgence in consumer demand for brown spirits.

Spokespeople for SPI, Campari, Lion and TPG declined to comment. United Spirits could not be immediately reached for comment.

Single malt

Diageo, which controls more than 20 per cent of the blended market, originally proposed the sale of most of Whyte & Mackay but with United Spirits keeping the smaller, single malt distilleries, Tamnavulin and Dalmore.

But the sources said United Spirits was now accepting bids on both the originally proposed package and the whole business, since suitors were more interested in the high-end Dalmore.

Earlier on Wednesday, Italy’s Campari announced a deal to buy Canadian whisky Forty Creek for $167 million. On a conference call, Campari Chief Executive Bob Kunze-Concewitz told reporters the company still had about 350 million euros to spend on other acquisitions.

When asked whether Campari was interested in buying Scotch whisky brands in particular, he said decisions would be based more on regional footprint rather than type of alcohol. “We’re not driven by category, we’re driven by geography,” he said.

Former Whyte & Mackay boss Vivian Imerman said in November that his investment firm, Vasari Global, would also be interested in buying Whyte & Mackay.

A spokeswoman for Vasari declined to comment.

Whyte & Mackay has earnings before interest, tax, depreciation and amortisation (EBITDA) of about 22 million pounds, according to the sources.

They said the majority comes from the bulk whisky business which could attract a multiple of roughly 10 times EBITDA, with the remaining portion coming from Dalmore and Tamnavulin, which would fetch a much higher multiple.


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Whyte & Mackay sale attracts several suitors, deal could be worth $600M

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