Pernod Ricard wanted some vodka really bad. So bad, in fact, the France-based corporation focusing on spirits, has purchased the Swedish Absolut vodka brand for $8.34 billion dollars.
Don’t think that Pernod Ricard doesn’t already have it’s hands in other spirits. They are stacked with other types of fine liquors in their business portfolio, including Scotch whisky, Cuban rum, and French Champagne. Pernod Richard adds Sweden to the mix, purchasing Absolut directly from the state-owned maker of Absolut vodka, Vin & Sprit.
“It is a unique acquisition,” says Pernod Ricard Managing Director Pierre Pringuet. “I would describe it as a big bang.”
What does Sweden think of this?
Well, the government ABSOLUTely loves the deal, mainly due to the higher than expected price tag for the Absolut brand. Shares immediately went down by 4.3% however – so investors weren’t too happy.
It’s hard to tell what the Swedish people think of this. The brand is now longer owned by a Swedish company; Pernod Ricard is based in France. I’d love to get some thoughts from the Swedish people about this mega-deal. Although not explicitly mentioned in the contract, the Swedish government believes that Pernod Ricard intends to keep Absolut vodka and its production inside Sweden.
“There is no written contract about that but the value of the brand is because it is Swedish,” said Pernod Ricard Chairman Patrick Ricard. “A Swedish brand must be produced in Sweden.”
Were there other companies bidding on Absolut?
There were 4 companies in total trying to grab Absolut. You had Pernod Richard, Fortune Brands (United States), Bacardi Ltd. (Puerto Rico), and an investment group headed by Sweden’s Wallenberg family.
“All four presented well-prepared and very interesting proposals, but it was soon clear to us that Pernod Ricard’s bid was the best,” said Mats Odell, Financial Markets Minister for Sweden. “It is a very good price for the company.”
Why did Sweden want to sell Absolut and why did Pernod Ricard want to buy?
If you want to know why Sweden want to sell, I can point you to a few numbers. 546 million numbers. Absolut’s company, Vin & Sprit, had $546 million in outstanding debt, which Pernod Ricard will now take over.
Pernod Ricard wanted Absolut because they feel the vodka company fills a gap in their offerings. They really didn’t have any premium vodka brands in their spirits portfolio. They also felt, due to the huge presence of Absolut in the United States, that this would bolster all of their spirits and perhaps they can use the Absolut name brand to push their other spirits in the USA liquor market.
“We wanted to bolster our presence in the United States and Absolut, with its 5 million cases (in yearly sales), will definitely do that,” said Pernod’s Pierre Pringuet.
About Pernod Ricard
Founded in 1975, they own Havana Club rum, Chivas Regal whiskey, Kahlúa coffee liqueur, Jameson Irish Whiskey, # The Glenlivet (single malt scotch whisky), Wild Turkey (bourbon), Seagram’s gin, Malibu coconut-flavored rum, Mumm Champagne, and Beefeater gin. Patrick Ricard is their current Chairman and CEO and their slogan is “Local roots, global reach”.
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