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Lanson sale edges closer

Published:  23 July, 2008

The purchase of Lanson International by Boizel Chanoine Champagne (BCC) is all but complete.
Former Marne & Champagne employees Bruno Paillard and Philippe Baijot, the two largest shareholders in BCC, look set to end up running the company they used to work for, once the French competition authorities have approved the deal as expected. And the enlarged company will be the second-biggest producer in Champagne after Mot Hennessy - a position Lanson International had ceded to Vranken Pommery last year.

While the purchase of Caisse d'Epargne's 44% stake in Lanson International was agreed before Christmas, and the Mora family's 56% share last month, the final piece of the jigsaw slotted into place at the end of January, when BCC's shareholders approved a new share issue worth e22.7m (about 15.6m) to help meet the purchase price of e122.7m. A pool of French banks, including Crdit Agricole du Nord-Est and Crdit Lyonnais, guarantees the acquisition. The share issue was underwritten by the French bank Caisse d'Epargne, which is taking a 15% stake in the enlarged company.

Lanson's debt, estimated at e413m in 2005, will gradually be reduced to e344m by 2008 through the selling-off of five million bottles of the 56 million bottles of stock, according to reports in the French press. It is extremely unlikely that BCC would want to sell off all of Lanson International's stock, as has been suggested by the CGT, one of France's largest unions, since that would leave them with no wine to market under the Lanson, Besserat de Bellefon, Alfred Rothschild and Mass labels.

These four brands between them accounted for around 10m bottles of wine in 2004 - Lanson with 5.5m bottles, Besserat de Bellefon 1.6m, Alfred Rothschild 2.5m and Mass 0.5m. Working on the basis that they would want to keep three years' stock for each, BCC would certainly need to hold on to at least 30m bottles for this purpose.

This, however, still leaves some 20m bottles to play with, the minimum value of which sur lattes would be around e200m. The current lowest price to buy undisgorged Champagne has been creeping up to around e9.60 a bottle and is expected

to move to nearer e10 as the market makes an allowance for the higher prices paid for grapes from the 2004 harvest.

It is widely believed that a private deal to sell some wine

to Mot & Chandon will be reached. It was probably agreed prior to the purchase being finalised, and Marne & Champagne's cellars in Epernay are right next to Mot's.

In the past, Lanson International (and Marne & Champagne before it) have supplied approximately 8m bottles of BOB Champagne, mostly to Europe's supermarkets. This has included the Etienne Dumont label supplied exclusively to Sainsbury's, of which the grocer claimed to sell more than 2m bottles in December 2005. BCC, however, is also a major supplier of own-label Champagne to Tesco.