November 05, 2014

EMP completes Whyte & Mackay acquisition

In a press statement, Emperador Inc (EMP) announced that it has completed last 31 Oct the acquisition of Whyte & Mackay. The deal was valued at an enterprise value if £430m or P31b. Whyte & Mackay is reportedly the world’s fifth Scotch whisky producer with an annual production capacity of 50m liters of alcohol through its five distilleries and a bottling plant in Scotland. Its products are sold in 50 countries in Europe and North America, with a strong presence in the global retail space.

Our take: Barring any execution or regulatory risks, we view the acquisition to create synergies for the group. EMP plans to bring some of the Whyte & Mackay products to the local market even as it earlier said it will explore the possibility of distributing EMP’s brandy products through Whyte & Mackay’s network. This should expand EMP’s product brands and markets, thus addressing one of the concerns on the company.

However, it would be worth monitoring how EMP will repay or refinance the £210m (or P15.17b) in debt that was used to partially finance the acquisition. We find it concerning that the huge loan will mature in just a year and could raise refinancing risks or the possibility of an equity issuance. – WealthSec