Premium spirits manufacturer and seller, Beam
Inc. ( BEAM ), has agreed to
sell some of its economy brands and related inventory to Luxco for
about $65 million. The company's decision to divest its economy
vodka and Canadian whisky brands is expected to simplify its
portfolio as well as enhance its focus on strengthening its most
profitable segments - Power Brands and Rising Stars.
The brands to be sold under the deal are Wolfschmidt vodka,
Calvert (Lord Calvert Canadian, Calvert Extra, and gin), Bellows
(blended whiskey, Bourbon, gin, rum, Scotch and vodka), Dark Eyes
vodka, Canada House Canadian, and Tempo Triple Sec, which are a
part of Beam's Value Creators segment. These brands contributed
about $30 million to the company's 2012 revenues, with total
volumes sold reaching nearly 1.8 million cases.
As part of the deal, Beam has agreed to continue producing and
packing the disposed brands till Jan 2014. However, the company
expects to complete the sale by the end of Jan 2013, subject to
customary closing conditions. Moreover, the sale of these brands is
expected to be neutral to Beam's EPS in 2013.
Luxco expects the acquisition to be accretive to its existing
portfolio of brands. Going forward, Luxco plans to further
strengthen the scope of its brands by expanding and increasing its
distribution.
Based in Deerfield, Illinois, Beam produces and sells branded
distilled spirits products worldwide. Beam segregates its brands
into four segments including Power Brands, Rising Stars, Local
Jewels and Value Creators. The company sells its spirits products
primarily through direct sales forces to distributors, as well as
through joint ventures, third-party distributors, and global or
regional duty free customers.
Beam currently has a Zacks Rank #4 (Sell). Not all beverage
companies are performing as poorly as Beam. Other wineries and
distillers that have a favorable Zacks Rank and are performing well
include Boston Beer Co. Inc. ( SAM ), Compania
Cervecerias Unidas S.A. ( CCU ), which carry a
Zacks Rank #1 (Strong Buy) and Brown-Forman
Corporation ( BF.B ), which carries
a Zacks Rank #2 (Buy).
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