Beam Agrees to Dispose Few Brands - Analyst Blog
22 January 2013 - 9:40PM
Zacks
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).
BEAM INC (BEAM): Free Stock Analysis Report
BROWN FORMAN B (BF.B): Free Stock Analysis Report
CERV UNIDAS-ADR (CCU): Free Stock Analysis Report
BOSTON BEER INC (SAM): Free Stock Analysis Report
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