Spanish Freixenet evaluates sale until April

The board of Spain's biggest sparkling-wine maker Freixenet has decided on its meeting on Wednesday to form a steering committee composed of members of the three family branches to end internal disputes and to find a buyer for the faltering company.

Last years have not been very successful for Freixenet. In the 1970s the wine maker from Catalan village Sant Sadurní d'Anoia, which is not far from capital Barcelona, succeeded in establishing Cava (Catalan word for “sparkling wine”) as a synonym for high quality Spanish sparkling wine. The production of Cava follows similar rules to the French champagne. Despite a rising demand for sparkling wine worldwide, Freixenet could only achieve a profit in 2015 of €2.2 million or 0.4% in relation to the total turnover of €501 million. Reasons to be blamed are only partly the tough market conditions on the domestic market following the recession after the year 2008. People close to the company name the weak management of CEO Pedro Ferrer, son of Freixenet’s Honorary President Josep Ferrer. Pedro Ferrer represents the dominating family branch, who owns 42% of the shares in Freixenet.  José Luis Bonet, representative of the Bonet family branch with 29% of the shares, speaks out loud what others think: “A yearly profit of €2.2 million is little. But that does not mean that a better management could not improve it.”

Now Eudaldo Bonet, brother of José Luis Bonet, Pedro Ferrer and Enrique Hevia, who represents the third branch of the family with another 29%, will form the committee to find a solution until the end of the fiscal year which ends in April 2017.

Best chances to buy Freixenet are said to have the German wine maker Henkell, which is part of Germany’s largest food and beverage manufacturer Oetker Group. Henkell already handed in in March an offer of €255 million for 51% of the shares,saying that it would also accept a minority interest with about 20%. The families of Oetker and Freixenet are long time business partners and friends. Freixenet’s two smaller family branches Hevia and Bonet are in favor of such a solution while the dominating third branch Ferrer favors a stand-alone solution.

In October the Ferrer family offered to buy 51% of the share capital at a price of €230 million but had to withdraw the offer, when it became clear that financing of the deal was not firm. Besides that, the offered price was below the €255 million offered by Henkell for the same amount of shares with the only advantage that the company could stay independent from third parties.

An unknown player in the game is Suntory.  The Japanese drinks company, distributor of Freixenet in Japan, was approached by Pedro Ferrer in September to evaluate a possible counter-offer. Suntory’s president is also said to be close to Freixenet’s owner families and Japanese companies currently seek to diversify their business into foreign markets in order to escape the ageing and shrinking home market. It is not known if Suntory only examined a financing of the internal family deal or if Suntory could be interested in a take-over of the whole company.

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