Suntory readies Rs 500 crore swig of Radico brands
BANGALORE: Japanese spirits giant Suntory is advancing to acquire a 26% stake in the recently demerged brands, distribution and sales arm of Radico Khaitan for Rs 450-500 crore, people familiar with the matter said.
This values the Radico Khaitan subsidiary - which houses millionaire brands like Magic Moments Vodka, 8PM Whisky, and Old Admiral Brandy - at around Rs 2,000 crore or just under 20 times its standalone operating profit.
Suntory will have the option to buy into the listed parent company in the next three to five years, after it gets comfortable with India's heavily regulated liquor industry, sources added. Radico Khaitan is the second largest Indian-owned domestic distiller.
The foreign acquirer has completed due diligence process and a deal could fall in place later this month. The deal would be a culmination of Radico's protracted three-year talks with Suntory, which initially kicked off with a distribution pact for the latter's top selling brands Yamazaki single malt and Hibiki blended whiskies.
Abhishek Khaitan, MD, Radico Khaitan, could not be reached for immediate comments. In an earlier interview to TOI, he had said that the demerger of company's brands business portfolio was done to bring in a foreign partner and enhance shareholder value.
Suntory spokesperson Hazumi Ozawa said the company had no comment to offer.
Following the demerger, which got shareholder approval in December, listed Radico Khaitan will continue to operate its large distilleries, bulk liquor trading, and manufacture of country spirits that are primarily sold in Uttar Pradesh.
Suntory's imminent Indian swig is another instance of MNCs tightening their grip over the country's over 300 million cases strong liquor industry. Riding on rising disposable incomes, favourable demographics, and changing social attitude, liquor consumption among the middle class is reporting a 10.8% value growth and 6.4% volume growth.
Last year, Diageo took controlling interest in India's largest distiller United Spirits, while French giant Pernod Ricard is the country's second largest spirit manufacturer. This leaves Allied Blenders & Distillers of liquor baron Kishore Chhabria as the only independent Indian distiller to be among the top five liquor companies by market share in the country.
Meanwhile, Suntory, which acquired the local unit of Beam Inc as part of a global transaction, will keep its Indian assets separate for the time being. The closure of the Beam deal is expected to happen in the second quarter of the current calendar.
This values the Radico Khaitan subsidiary - which houses millionaire brands like Magic Moments Vodka, 8PM Whisky, and Old Admiral Brandy - at around Rs 2,000 crore or just under 20 times its standalone operating profit.
Suntory will have the option to buy into the listed parent company in the next three to five years, after it gets comfortable with India's heavily regulated liquor industry, sources added. Radico Khaitan is the second largest Indian-owned domestic distiller.
The foreign acquirer has completed due diligence process and a deal could fall in place later this month. The deal would be a culmination of Radico's protracted three-year talks with Suntory, which initially kicked off with a distribution pact for the latter's top selling brands Yamazaki single malt and Hibiki blended whiskies.
Abhishek Khaitan, MD, Radico Khaitan, could not be reached for immediate comments. In an earlier interview to TOI, he had said that the demerger of company's brands business portfolio was done to bring in a foreign partner and enhance shareholder value.
Suntory spokesperson Hazumi Ozawa said the company had no comment to offer.
Following the demerger, which got shareholder approval in December, listed Radico Khaitan will continue to operate its large distilleries, bulk liquor trading, and manufacture of country spirits that are primarily sold in Uttar Pradesh.
Suntory's imminent Indian swig is another instance of MNCs tightening their grip over the country's over 300 million cases strong liquor industry. Riding on rising disposable incomes, favourable demographics, and changing social attitude, liquor consumption among the middle class is reporting a 10.8% value growth and 6.4% volume growth.
Last year, Diageo took controlling interest in India's largest distiller United Spirits, while French giant Pernod Ricard is the country's second largest spirit manufacturer. This leaves Allied Blenders & Distillers of liquor baron Kishore Chhabria as the only independent Indian distiller to be among the top five liquor companies by market share in the country.
Meanwhile, Suntory, which acquired the local unit of Beam Inc as part of a global transaction, will keep its Indian assets separate for the time being. The closure of the Beam deal is expected to happen in the second quarter of the current calendar.
vijay kr yadav
pgdm sem-1
sou- times of india
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