42 Below gets takeover offer from Bacardi

Vodka company 42 Below said today it had received a takeover offer from Bacardi Ltd at 77 cents per share, valuing the company at $138 million.

The cash offer was at a 35 per cent premium to yesterday's closing price of 57 cents. The stock has traded between 48 and 71 cents in the last year.

42 Below listed on the New Zealand Stock Exchange almost three years ago with a market value of $60m.

The company said the offer was an opportunity for 42 Below to become a global brand.

Bacardi is a world leader in spirits with brands such as Bacardi, Bombay Sapphire, Grey Goose, Dewar's and Martini in its stable.

"Bacardi has immense respect for the iconic New Zealand company and has plans to invest heavily in 42 Below products worldwide," company founder Geoff Ross said.

The company was founded in a Wellington garage only seven years ago. Mr Ross said the offer represented a "great story for New Zealand, for our shareholders and for the brands".

"I think we as New Zealanders should be pretty rapt to see a Kiwi brand become an icon in the luxury goods world.

"The brand has always been unashamedly New Zealand and now with Bacardi's help our country's vodka brand is set to become a major global force," Mr Ross said.

For shareholders who bought at the initial public offering the offer price represents a total return of 68 per cent over three years due to the warrants they received.

Bacardi plans to bring to bear the resources of its global marketing and distribution infrastructure to accelerate the presence of 42 Below from 25 to more than 130 countries.

Mr Ross and fellow founding shareholders Grant Baker, Stephen Sinclair, and substantial shareholder, David Wright, own 53 per cent of the company's shares and warrants issued, and have committed to the offer by way of irrevocable lock-in agreements.

An independent committee of the board will consider the offer and report to shareholders.

Bacardi needs Overseas Investment Office approval and has set a condition of achieving 90 per cent control.

The formal offer is expected to be mailed to shareholders in early November, to enable time for the company's Series 2 Warrants to be exercised.

42 Below also owns the South Gin, Seven Tiki Rum, Stil Vodka, Tahiti Dark Rum and 420 Spring Water brands.

Mr Ross said all production would remain in New Zealand, which he said was important in maintaining the brand's credentials.

Bacardi president and chief executive Andreas Gembler said Bacardi was acquiring exciting young, premium brands with long-term growth potential in the growing category of premium spirits.

Bacardi would invest heavily in the 42 Below brand portfolio and supporting infrastructure to really get it on top of the world stage, Mr Gembler said.

42 Below had opened its books to Bacardi in anticipation of an offer and the independent committee had appointed advisers Grant Samuel to provide an independent expert's report in accordance with the requirements of the Takeovers Code.

While that report had not been completed, Grant Samuel has indicated to the independent committee its assessment that the terms of the offer, and value, were fair.

Based on that, and the wider benefits the committee saw flowing to 42 Below from it becoming part of the Bacardi group, the independent directors on the committee said they anticipated recommending the offer for acceptance, and to accept it in respect of their own holdings.

Bacardi is the largest privately held spirits company in the world. It over 250 brands and labels.

- NZPA