BACARDI SHARE DECISION

Published: 23 July, 2008

Merger speculation surrounds Bacardi-Martini, following the family-owned rum and spirits company's decision to create two new classes of stock. Allied Domecq and Brown Forman have both been mooted as potential suitors. Indeed, reports in the financial press state that Allied chief executive Philip Bowman has already had a number of meetings with Ruben Rodrguez, his counterpart at Bacardi, over a possible $10 billion merger. Rodrguez, who is both chairman and chief executive of the rum giant, persuaded the 600-odd family shareholders to agree to his plans (a similar request had been defeated in 1999), by arguing that, with rapid consolidation in the industry continuing apace, extra funds would be needed to enable further acquisitions. However, the new class of shares would have only one vote, as opposed to a family share's ten, thereby keeping control firmly within the family. The vote only allows for the creation of these shares and not their issue. This would need a further vote supported by two-thirds of shareholders. Even then, only 30% of shares would be offered to outside investors. .

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