Financial Strategy & Corporate Control - Case study on Remy Cointreau

Résumé du document

Remy Cointreau is a French group with the principal activity of producing and distributing wine-based products. It operates under the following segments: Cognac, Liqueurs & Spirits and Champagne. It is present in Europe, America and Asia.

The Group is famous all over the world for the quality of its products and its strategy focusing on top-of the-range. Though the wine and spirits market is very competitive and atomized, Remy Cointreau is ranked among the top 10 in the market.

Remy Cointreau distributes its Cognac under the brand name Remy Martin, VSOP, Accord Royal, Club, Vintage 1988 and Louis X111.

Under Liquors and Spirits, the Group distributes its products under the brand names Cointreau, Metaxa, Mount Gay Rum and Passoa.

The Group also offers a range of champagnes under the brand name Charles Heidsieck and Piper Heidsieck. Their champagnes are marketed in hotels, bars and restaurants. The Group is present in Europe, America and Asia.

The Group distributes its products through two distribution networks - Maxxium in Europe and Asia, and Remy Cointreau in the United States. The aim of the group consists in leaving Maxxium for 2009 to gain in independence.

Extraits

[...] This is the biggest announced M&A deal done by Rémy Cointreau. It could be seen as the sign that Rémy's eager to consolidate its status in Netherland. But years after this acquisition, it decided to dispose this subsidiary for only 250.11 Million Euros, nearly half of bid price, for lack of profitability. Following the next 4 years, Rémy Cointreau disposed 4 subsidiaries and merged one into a joint venture. In 2006, except the disposal of Bols we have discussed, Bols Hungary was also acquired by Central European Distn Group. [...]

[...] It raised 300 million Euros funds for 5 years with only coupon which is a low rate. M&A analysis From 1998 to 2008, Rémy Cointreau entered into 20 completed M&A deals of these deals Rémy Cointreau (or its subsidiary) played Target and in the rest 3 it played Acquirer. This is a huge number for a not so huge group. The financial year of 1998 started with an announcement of merger of a unit of Rémy Cointreau named Bizac with Palmilord. [...]

[...] Over half a year later, another unit was acquired by LVMH. In 1999, LVMH, again, acquired a unit named Krug Vins Fins de Champagne for 176.87 Million Euros. Following, an investor group acquired the subsidiary named GVG through a leveraged buy- out. Later in that year, Rémy Cointreau merged its non-US wine spirits distribution and sales networks into a joint venture named Maxxium for seeking a low-cost way of distribution. In 2001, it was acquired by V&S Group for 25% stake. [...]

[...] Repurchasing before exercise could limit the effect of dilution. As we can see, from 2005, Rémy Cointreau kept selling treasury shares back to the market. Meanwhile, new shares were issued every year, because that when share price went higher, more options would be exercised and it is also a good opportunity for company to raise new fund more than before. From 2005 to 2008, Rémy Cointreau increase its number of share by around 500 thousand every year, including sales of treasury shares though only accounts for a small proportion. [...]

[...] This is a successful strategy of disposal. In the following years, Rémy Cointreau's strategy stuck to this strategy, and hopefully, it worked. The total financial debt reduced from 870 to 411.9 Million Euros during 2001 to March 2008. Appendix I Porter 5 forces analysis Appendix II Value Chain analysis Appendix III Profitability, liquidity and Capital Structure (Source: infinancials) Appendix IV Asset Utilization (Source: infinancials) Appendix V WACC for 10 years period (Source: Associe en Finance) Appendix VI Future Growth Value vs. [...]