Emperador to buy cognac maker

EMPERADOR INC., the country’s largest liquor manufacturer, is set to acquire French cognac maker Louis Royer SAS in a transaction that continues the European acquisition binge of property tycoon Andrew Tan.

The Inquirer learned over the weekend that the deal—which officials familiar with the deal described as a “multibillion peso” purchase—may be sealed as early as Wednesday between Tan and Japanese spirits giant Suntory Holdings Ltd. which owns Jarnac, the France-based firm.

Louis Royer was founded in 1853 and, apart from its flagship cognac brand, is also known for producing brandy, liquors and vodka.

Emperador’s looming French venture is the third such acquisition for the Filipino brandy maker, having acquired Scotland-based scotch maker Whyte & Mackay for P31 billion, and over 1,000 hectares of vineyard in Toldeo, Spain, belonging to Bodega Las Copas and San Bruno S.A. late last year.

The acquisition is a positive development for the Philippines in general, and the local liquor industry in particular, which is steadily building a name for itself overseas due to Tan’s expansion in the European scene.

Sources told the Inquirer that the opportunity for Emperador to buy Louis Royer came after Suntory decided to acquire US-based Beam Inc.—maker of renowned whiskey maker Jim Beam—last year for $16 billion, making Suntory the third largest spirits maker in the world. This acquisition resulted in Suntory reorganizing its business lines, and putting some units on the market to raise money for the Beam transaction.

Louis Royer was acquired in 1989 by the Suntory group, which is one of the oldest alcoholic beverage firms in Japan.

Louis Royer also has a market-leading presence in China.

In 2013, Luis Royer “Force 53” VSOP Fine Champagne Cognac received a “Best in Show” double gold medal at the San Francisco World Spirits Competition and the house’s XO was awarded a gold medal in 2013. In addition, XO was named among the World’s Top 120 Spirits by Paul Pacult’s The Spirit Journal.

The company is situated on the banks of the Charente River in the Cognac region of France.

Emperador is part of the Alliance Global Group of Companies, a major global conglomerate engaged in real estate development, tourism entertainment and gaming, food and beverage, and quick service restaurants.

Emperador recorded P6.1 billion in net income in 2014, representing a 5-percent rise from the P5.8 billion it posted in 2013. The company’s consolidated revenues increased by 7 percent to P32 billion.

In a statement a few weeks ago, Tan said that 2015 would be “the beginning of the rapid expansion of our businesses,” both in the domestic and global markets.

“This year, we expect our revenues to grow by 35 percent,” he predicted.

Emperador ended 2014 with a strong balance sheet and a net cash position of P4.85 billion, after spending close to P35 billion on overseas acquisitions.