|
Seagram out of champagne
|
 |
June 25, 1999: 1:44 p.m. ET
Canadian distiller to sell two bubbly houses to Hicks, Muse for $310M
|
NEW YORK (CNNfn) - Four-star champagne is coming to the Lone Star State. The Seagram Company Ltd. said Friday it will sell world class champagne brands Mumm and Perrier-Jouet to Texas private investment firm Hicks, Muse, Tate & Furst for $310 million in cash.
Seagram (VO), the Canadian beverage and entertainment company, will retain world distribution rights.
This move by Hicks Muse could be followed by further champagne acquisitions, possibly introducing a new and formidable competitor into the champagne market on the eve of a boom in demand ahead of the millennium.
"It is certainly well within the realm of possibility that, should other champagne brands come available, we would add to the business," Lyndon Lea, a principal partner at Hicks Muse, told Reuters.
While premium champagne is a relatively small part of the beverage market with $3.3 billion in 1998 sales, profits can be significant. French luxury goods company LVMH has done particularly well with its premium labels, Moet & Chandon, which makes Dom Perignon, and Veuve Clicquot.
Mumm is the third-largest selling champagne, but marketing faltered under Seagram, according to analysts.
For Seagram, the sale continues a trend of raising cash. In April, the company sold its 30 percent stake in the U.K.'s Really Useful Group back to its founder, the music composer Andrew Lloyd Webber, in a deal valued at $75 million. And last week, the company set its $2.3 billion equity offering at $50.13 a share.
"This agreement enables us to generate significant cash, whilst retaining global distribution of both brands," Steven J. Kalagher, president and CEO of Seagram's spirits and wine group, said of the champagne sale.
As part of the agreement, expected to close in July, Seagram will retain its sparkling wine business in California and Latin America.
Hicks Muse has bought more than 250 businesses since its formation in 1989, including Ghiradelli chocolates and Dr. Pepper/7Up soft drinks. It is amassing a $1.5 billion fund dedicated to European deals.
Shares in Montreal-based Seagram gained 1/8 to 50-1/4 in midday trade on Friday.
-- from staff and wire reports
|
|
|
|
|
|
Seagram
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
