Pernod deal could hit Fosters sale

Pernod Ricard has agreed the sale of 12 New Zealand wine brands in a deal which could have ramifications for Foster’s in its attempts to dispose of its own wine assets.

Pernod this week sold Lindauer and several other New Zealand wine brands from Gisborne and Hawke’s Bay to a consortium of buyers made up of Lion Nathan and Indevin for NZ$88 million (£41.48m).

The deal was struck at something of a bargain price at just 4.5 times the earnings of the combined assets, which could spell trouble for Foster’s who last month rejected an offer for its wine assets from Cerberus Capital equivalent to between 10.5 and 12.2 times earnings, saying it undervalued the business.

Foster’s might now find itself having trouble attracting bidders to even go that high in light of the Pernod transaction. The company is due to issue an update on its plans to demerge its wine division later this week.

Meanwhile Pernod said it decided to streamline its portfolio and production in order to refocus its wine strategy behind core brands.

Managing director of Pernod Ricard New Zealand, Fabian Partigliani, confirmed that the company was still committed to the country and to the long-term development of its wine and spirits portfolio, including Brancott Estate, Stoneleigh, Church Road, Deutz, Boundary and Triplebank.

The deal also further strengthened Lion Nathan’s standing in the New Zealand wine market, with ambitions to grow further over the coming years.

Corporate affairs director Neil Hinton said: “[The deal] certainly fits with our model and our strategy is around being a one-stop-shop for all of our customers’ needs.

“At this point in time… it gives us something like about 16% of the total New Zealand wine market. So we’re still miles off being in any position of market strength.”

Alan Lodge, 20.10.2010