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 Liquor firm Emperador Inc <EMP.PS>, controlled by the Philippines'
fourth-richest person, Andrew Tan, said last week it has submitted a
bid to buy Louis Royer, which has been put on the block by Japan's
Suntory Holdings Ltd [SUNTH.UL] and is valued at about $150 million
by sources. Charoen controls Thai Beverage PCL.
The emerging battle for Louis Royer underscores the tycoons' desire
to add top-end spirit brands to their portfolios, both to help sell
their other brands and to benefit from a revival in demand for
cognac in Asia, which is driven by countries such as Malaysia and
Vietnam where wealth is accumulating rapidly.
"It's not really about the fundamental value of the business," said
one senior Hong Kong-based M&A banker involved in the deal. "It's
about having a high profile brand inside your portfolio that helps
you sell other products."
It was not immediately clear if there were other bidders for Louis
Royer or when a final decision on the sale will be reached. Suntory
declined to comment.
"We don't have a (cognac) business. We are open for every
opportunity for beverage business," said Vichate Tantiwanich, senior
vice president for corporate affairs at Thai Bev, when asked if his
group will make a bid for Louis Royer. "But for this brand (Louis
Royer), we can't confirm that we will buy."
Louis Royer, which has about 7 billion yen ($57.1 million) of annual
sales, was bought by Suntory in 1989 as the Japanese company was
expanding overseas. But over the years, Suntory has taken on too
much debt to build its global empire, including the $15.7 billion
purchase of spirits maker Beam Inc, and is looking to exit some of
its brands.
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CHINA CRACKDOWN
Asian demand for cognac, a variety of distilled brandy named after
the town of Cognac in France, has dropped over the past few years
due to a crackdown on conspicuous consumption in China. But it is
set to recover and reach 30.4 million litres in 2019, a rise of 13
percent from 2015 that will outpace world demand growth, market
research firm Euromonitor forecasts.
Malaysia and Vietnam are the other big cognac consumers in the
region, ranking number three and four, behind China and Taiwan.
Vietnam's demand is set to surge 75 percent between 2014-2019,
Euromonitor estimates.
Louis Royer, with its XO cognac that was launched in 1988 in a
decanter, is the smallest of the global cognac makers. The industry
is dominated by the likes of LVMH and its Hennessy brand, and Remy
Cointreau, maker of Remy Martin cognac, among others.
Charoen was Thailand's third-wealthiest in 2014, when he had a net
worth of $11.3 billion, according to Forbes. Tan has a net worth of
about $4.6 billion, the publication estimates.
(Additional reporting by Ritsuko Shimizu and Emi Emoto in TOKYO,
Enrico Dela Cruz in Manila; Editing by Muralikumar Anantharaman)
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