French drinks group Remy Cointreau said on Tuesday it would buy Dutch drinks company Bols for 510 million euros ($679.6-million Canadian) in cash and stock and reiterated an interest in buying some of Canadian giant Seagram's brands.
Remy said it would pay 360 million euros in cash and issue 5.1 million shares, with a guaranteed minimum price of 30 euros, to finance the offer, which should be completed in November.
Founded in Amsterdam in 1575, Bols has a leading position in the Netherlands, Belgium, Poland and Greece and exports its drinks -- which include Greek favourite Metaxa, Bols Blue, Bols liqueurs and German brandy Asbach -- to 110 countries.
The move is in line with a June pledge by Remy Cointreau's President Dominique Heriard Dubreuil to participate in the restructuring of the global drinks industry, shaken up by the planned sale of Seagram Co Ltd's drinks business.
A Bols spokesman in the Netherlands said the deal was not a precursor to a bid for the Seagram activities although a Remy spokeswoman in Paris told Reuters the company was tempted by some individual Seagram brands that may be spun off.
The race to buy Seagram's drinks division has hotted up over the past week with Diageo, the world's largest liquor company, and French distiller Pernod Ricard teaming up to bid. Diageo rival Allied Domecq is the other main contender for a business valued at some $10-billion.
Both companies dwarf Remy, which has a market capitalisation of 1.45 billion euros based on a share price of 38 euros.
Some analysts said it was positive that current Bols owner CVC Capital Partners would end up with a nine percent stake in Remy -- famed for its eponymous orange-based liqueur -- as part of the deal. But others expressed concern about Remy's future debt levels.
"The market does not like an operation that would increase the company's debt or increase their capital," said a Paris-based analyst who declined to be named.
Remy President Dominique Heriard Dubreuil told Reuters in an interview that the deal would have a neutral impact on the company's gearing.
Remy shares slipped 3.82 per cent to 37.99 euros at 1102 GMT while Paris's CAC index was up 0.19 per cent, after touching a 36.41 low. Remy has rallied from a 18.80 euro March low.
Remy said the buy would boost its central and eastern Europe exposure and give it a presence in white spirits, notably through its acquisition of Poland's second biggest vodka, Bols.
Wargny analyst Cedric Lauboutin said the price was roughly in line with going rates in the sector. Jean-Noel Vieille, analyst at Meschart-Rousselle, estimated Remy had paid roughly twice Bols' turnover and saw the news as positive.
"The arrival of a financial partner -- CVC Capital partners will hold nine per cent -- will probably give Remy Cointreau the financial means for a new acquisition," Mr. Vieille said.
Remy said the deal would boost earnings per share in its 2000-01 fiscal year, before accounting for synergies. The new group would have sales of over 1.1 billion euros and operating profit over 200 million euros.
Mr. Dubreuil put annual synergies related to the Bols purchase at over 10 million euros.