May 14, 2014

EMP acquires Whyte & Mackay

In a disclosure, EMP announced it has completed an all-cash offer to acquire 100% of Whyte & Mackay Group limited for £430m (P31.9b). Based on EMP’s disclosure, Whyte & Mackay is the world’s 5th largest maker of Scotch whisky with an annual production capacity of 50m liters of alcohol. It owns five distilleries and one bottling plant in Scotland and exports to more than 50 countries mainly in Europe and North America.

EMP expects Whyte & Mackay to be immediately accretive to earnings. EMP has not specified the
source of funding for the acquisition but it had P24b in cash as at end-2014 and recently announced plans to borrow up to 705 of its equity which we estimate can reach P21b.

Sources: Bloomberg, Technistock

Our take: Based on online news reports, the acquisition price translates to 19.3x 2014 EV/EBITDA vs. 14.4x average for the global market as per Bloomberg data. Two previously reported acquisitions were at 20.3x (Suntory’s acquisition of Beam – maker of Jim Beam -- in Jan 2014) and 23x (LVMH acquisition of Glenmorangie in 2004).

The acquisition should provide EMP access to Whyte & Mackay’s global distribution network while exposing the company to two of the fastest growing spirits segments (brandy and whisky). – WealthSec