What will happen to Glenmorangie?
Last week the MacDonald family, which owns 50 per cent of whisky brand Glenmorangie, announced it would be selling its controlling interest.
The stock price of the brand was at an all-time high and so this has led to a frenzy of speculation about the multi-million pound sale of the best-selling single malt in the UK.
The Publican tries to break through the hype.
Why are the MacDonalds selling up?
According to Alan Gray, whisky analyst at Sutherland's stockbrokers in Edinburgh, and author of the Scotch Whisky Industry Review 2004, the MacDonalds are a very low-profile whisky family.
"David MacDonald was the last family chairman and that was some years ago. Now there are no family members left on the executive of the company and there are no plans for anyone else to join," he said. "The share price has performed well and there is real interest in the sector. So the family has probably thought, why not bite the bullet and take the money?"
Sikhender Singh, from the Whisky Exchange in London, agrees, saying the only reason the MacDonalds could have wanted to sell up, given "how little input the family has in the day-to-day running of the distillery, is to maximise its returns".
Which companies are the front runners?
- Brown-Forman - The US company, which counts Jack Daniel's among its more illustrious brands, is the early favourite.
It already distributes Glenmorangie in the UK and US and has a 9.6 per cent stake in the company. According to Mr Singh, Glenmorangie would "fit in nicely at Brown-Forman".
Bacardi-Martini - The US giant has been blazing a trail of acquisitions, culminating in June's purchase of Grey Goose vodka for £2bn. So Mr Singh's opinion, the purchase of Glenmorangie - its last valuation was at £250m - "would be a piece of cake".
Allied Domecq - Allied's best known single malt Laphroaig, is not a huge seller, so it could do with a big hitter like Glenmorangie. However, the company is unlikely to put forward an offer because of its increasing focus on wine brands and its history.
In 1997 Allied sold a large chunk of its whisky arm, including the Ardbeg distillery to Glenmorangie. Why would it want to buy it all back again?
Pernod Ricard - While the brand would fit in nicely with Pernod's Chivas whisky, the feeling among experts is that Pernod has too much on its plate at the moment. After all it has just finished the restructuring of the company after its acquisition of Martell from Seagram.
CL Financial - According to Sikhender Singh, this multi-billion pound finance and insurance company could be a surprise bidder. It has recently bought two major distilleries, London-based distribution company Paragon Vintners as well as Angostura Bitters.
What about Diageo?
The general consensus is that Diageo is not even a contender in this race because of competition issues.
Alan Gray says: "I have no doubt that there would be competition issues involved. It has so many well-known whisky brands and doesn't urgently need to buy it."
Indeed, the formation of Diageo in 1997 could only be ratified by competition chiefs once it had sold off one of its main brands. It turned out that the merger between Grand Metropolitan and Guinness would have given Diageo too powerful a position in the whisky marketplace. In the end it sold Dewar's to Bacardi.
The consensus among the experts is that either Bacardi or Brown-Forman are the favourites. Mr Singh says he hopes the brand will be bought by a small family-orientated company, "because that fits in with Glenmorangie's heritage".
However, he sounded a note of caution for any potential buyer.
"In my experience as a buyer, Glenmorangie has under-distilled over the last few years," he says. "All I can get my hands on are bottles of its 10 year old. There are very few bottles of its 15 or 18 year old single malts around and that could mean trouble for Glenmorangie in the next few years."
Related articles:
Family shareholders prompt Glenmorangie sale (24 August 2004)
