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Bacardi considers bid for V&S

Published:  23 July, 2008

Bacardi, the maker of the world's leading rum brand, has contacted the Swedish government, saying it wants to buy Vin & Sprit (V&S), the owner of Absolut vodka.

Last week, the Swedish government, which owns V&S, formally asked parliament in Stockholm for permission to privatise the group. Unconfirmed reports suggest that Bacardi, which already owns Grey Goose, the super-premium vodka brand, had offered 3 billion for V&S.

Andreas Gembler, Bacardi's chief executive, was quoted in the Financial Times as saying: V&S and Absolut would make a terrific fit for Bacardi of the few global brands that are really left to acquire, V&S - and Absolut in particular - obviously represents a jewel in the crown for a company like ours.'

The Swedish government has yet to decide whether to seek a direct sale of V&S or to list its shares on a stock market and then let interested parties fight a takeover battle for ownership.

Analysts suggest that Bacardi's move is an attempt to pre-empt potential competitors for Absolut, such as Pernod Ricard, Constellation Brands, Brown-Forman and Fortune Brands, which owns Jim Beam, and with which V&S has a jointly owned distribution company in the US.

Pernod Ricard has already expressed informal interest. It is also attempting to buy Stolichnaya, the vodka brand whose distribution rights it already owns.

Gembler said he would like to buy V&S (including the Swedish distribution arm and the minor Nordic spirits brands) as soon as possible', and hoped a sale would be concluded by the autumn.

He also said that Barcardi itself would not need to seek a stock market listing to raise the funds for such a purchase. We have absolutely no problem with financing any deal of this size,' he said. The banks that have lent us money in the past and that are lending money today would be happy to help us in this situation.'

A stock market listing has long been a controversial subject for Bacardi because it would dilute the control of the 500 disparate family members who own the company.