Sammy Hagar's tequila gets a big shot

The former Van Halen frontman is selling a large stake of his famous Cabo Wabo tequila.

By Ian Mount, FSB contributor

(FSB Magazine) -- Former Van Halen frontman Sammy Hagar knows how to party profitably. In May he inked a deal to sell 80 percent of his Cabo Wabo tequila business to Gruppo Campari for $80 million.

Starting as the house tequila at Hagar's Cabo Wabo Cantina in Cabo San Lucas, Mexico, in 1996, the spirit grew into a popular premium brand, with more than 140,000 cases sold in 2006.

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Hagar says the deal will lead to worldwide distribution, which would be difficult to accomplish on his own. "I don't like working that hard," he says.

The price, 11.8 times expected 2007 Ebitda, is a respectable multiple, according to Jim Carroll, a managing director of investment bank Hunter Wise (hunterwise.com).

And, he adds, Hagar is "astute" to retain a 20 percent stake: "Cabo Wabo will surely benefit from greater market acceptance and higher profitability as part of a larger corporation."  Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.