French Liquor Brands Attractive as Targets

Prestige French liquor brands, household names throughout the world, have become prize targets in a global game of acquisition being played by multinational and domestic companies eager to add to their own standing.

Closely following an apparently successful takeover bid Monday by Seagram Co. of Canada for Cognac maker Martell et Cie, brandy distiller Remy Martin said it would launch a bid for liqueur maker Benedictine.

Members of the Martell family said they accepted a sweetened takeover bid of about $818 million (4.5 billion francs) for Martell, apparently ending a transatlantic battle for control of the 273-year-old firm.

With the interest in the sector heating up, Remy could find itself the target of an outside buyer, share analysts said.

“This is a widely known and much discussed topic . . . the idea is that to last in the game you’ve got to have international distribution capacity of your own and as complete a range of brands as you can manage,” one share analyst said Tuesday.

Adding to the attraction is the fact that food-and-drinks firms are, for industrial conglomerates, a haven in the expected storm of economic recession.

One problem in the Martell-Seagram deal is the joint venture Martell has with Britain’s drinks-to-hotels group Grand Metropolitan PLC to distribute each others’ brands everywhere outside Britain and the United States.

Grand Met has made two offers for the 80% of Martell shares it does not already own, but both were topped by Seagram.

If Seagram buys the tradition-bound Martell, the distribution network, estimated to be worth up to $300 million, would pass under the control of one of Grand Met’s direct global competitors.

The Martell family said of its acceptance Monday of Seagram’s sweetened bid, “We hope that this decision will leave no doubt over the outcome and will halt the uncertainty over the future of the company.”

With the 11.59% of Martell it bought in the market, Seagram would own just over 52%, and have control. “I think it’s pretty much finished,” one analyst said.

In other French drinks deals, Pernod Ricard, maker of Cinzano and Dubonnet aperitifs as well as the Pernod, Ricard and Pastis distilled spirits, said it is selling lucrative Coca-Cola French production and distribution rights in a move that has analysts mystified.

Some said Pernod Ricard would go after one of the other small producers.

The world’s best-selling Cognac, Hennessy, plus Moet et Chandon champagne, fell under the control of conglomerate Louis Vuitton-Moet Hennessy when the drinks firm joined with the luxury luggage maker last year to cement defenses against just such a takeover wave.

Other swank brands remaining independent are Chartreuse, which is distilled under license from a Carthusian order of monks, and Marie Brizard, a family-owned maker of sweet liqueur.

Orange liqueur manufacturer Cointreau is also family-owned and has family ties to the Heriard du Breuil clan, which owns the majority of Remy Martin.

A bid for Benedictine could whip it from under the nose of the British Whitbread PLC.