High spirits battle: Asia tycoons vie for cognac maker Louis Royer

Fri May 29, 2015 6:53am EDT
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By Denny Thomas and Khettiya Jittapong

HONG KONG/BANGKOK (Reuters) - Thai billionaire Charoen Sirivadhanabhakdi is considering buying cognac maker Louis Royer, people familiar with the matter said, potentially locking horns with a Philippine tycoon for the French firm amid a forecast rebound in Asian demand for luxury spirits.

Liquor firm Emperador Inc (EMP.PS: Quote), controlled by the Philippines' fourth-richest person, Andrew Tan, said last week it has submitted a bid to buy Louis Royer, which has been put on the block by Japan's Suntory Holdings Ltd [SUNTH.UL] and is valued at about $150 million by sources. Charoen controls Thai Beverage PCL (TBEV.SI: Quote).

The emerging battle for Louis Royer underscores the tycoons' desire to add top-end spirit brands to their portfolios, both to help sell their other brands and to benefit from a revival in demand for cognac in Asia, which is driven by countries such as Malaysia and Vietnam where wealth is accumulating rapidly.

"It's not really about the fundamental value of the business," said one senior Hong Kong-based M&A banker involved in the deal. "It's about having a high profile brand inside your portfolio that helps you sell other products."

It was not immediately clear if there were other bidders for Louis Royer or when a final decision on the sale will be reached. Suntory declined to comment.

"We don't have a (cognac) business. We are open for every opportunity for beverage business," said Vichate Tantiwanich, senior vice president for corporate affairs at Thai Bev, when asked if his group will make a bid for Louis Royer. "But for this brand (Louis Royer), we can't confirm that we will buy."

Louis Royer, which has about 7 billion yen ($57.1 million) of annual sales, was bought by Suntory in 1989 as the Japanese company was expanding overseas. But over the years, Suntory has taken on too much debt to build its global empire, including the $15.7 billion purchase of spirits maker Beam Inc, and is looking to exit some of its brands.