If whisky makes you frisky does gin make you spin? I ask this on behalf of the hardy bunch of Capevin shareholders who have endured a rather uncomfortable silence since I reported in May that the unlisted liquor group was in the middle of a proposed deal to sell the Southern African distribution rights to Gordon’s Gin to international drink brands giant Diageo.
At the time, reference was made to a liquor sector insider who had speculated that Capevin, which has investment giant Remgro as an anchor shareholder, could bank as much as R1bn in the deal. There were more than a few messages from readers asking whether I was sober when I wrote the article.
With the Gordon’s brand already belonging to Diageo, I suppose a R1bn price tag for what are essentially distribution rights might seem excessive. One irate correspondent (you know who you are) reckoned I was “out of my $#^&%*@ tree!” Some punters, judging by messages on social media, were even expecting as little as R300m. O ye of little faith …
One needs to grasp just how lucrative the Gordon’s distribution agreement was for Distell and, for a few months, Capevin. The gin sector — with an array of brands and craft products — is a particularly sweet spot on the liquor landscape. Gordon’s remains the best seller, and still by some margin, I’d imagine.
The gin sector — with an array of brands and craft products — is a particularly sweet spot on the liquor landscape. Gordon’s remains the best seller
In any event, at an investor presentation for its year to end-June results, Remgro confirmed that Capevin had indeed offloaded Gordon’s to Diageo for R1bn — with R700m of that deal already in the bank. The outstanding balance will be paid over in the next 10 months. Considering there are (sometimes unfair) perceptions that the wheels don’t spin too fast at Remgro, this expedient grind at Capevin is a most decent outcome.
Banking R1bn at Capevin might even temper some of the lingering remorse that Remgro let go of its controlling stake in Distell to Heineken at a bargain price. If I were a betting man — and indeed I am — I’d wager Capevin forks out the bulk of the R1bn in a special dividend. A revitalised and revamped Remgro is stressing dividend flows to its shareholders and a stiff dividend tot from Capevin could reinforce distributions markedly in (hopefully the first half of) the 2024 financial year.
Gin flows aside, it seems Capevin’s premium scotch brands, with names that roll off the palate like Bunnahabhain, are still seeing brisk business. Remgro executives made it plain that the offshore whisky business also played a key role in driving valuations at Capevin — obviously also helped by the weaker rand of late. Rather startlingly, Remgro now values Capevin — with the Gordon’s proceeds factored in — at R22.60 a share. That’s a more than 50% gain from the R15 a share buyout offer price that formed part of the larger Heineken/Distell deal.
When I tweeted this fact, feisty investor Albie Cilliers responded quick as a flash that “Remgro confirms why appraisal rights are a necessary shareholder remedy in SA.” I remain ambivalent about appraisal rights, but from the outset I maintained R15 a share was way too cheap for Capevin’s whisky and gin assets.
Still, I don’t think I’d sell my few Capevins for R22.60 a share — not with plenty whisky stock still to be turned into premium product and a good chance of value enhancing corporate action. What might drive me to drink in the interim, though, is if Capevin’s corporate communications keeps the mute button on.
If Capevin is to make an effort to replicate the reporting standards of a listed company then it surely needs to timeously inform its shareholders — not only Remgro — of major transactions
If Capevin is to make an effort to replicate the reporting standards of a listed company then it surely needs to timeously inform its shareholders — not only Remgro — of major transactions that so drastically affect the share valuation. As I write, a day after the release of Remgro’s year-end results, the Capevin website’s investors relations page shows nary a mention of the important Gordon’s deal.
As a minority shareholder I would like to be treated like Remgro and be privy to such key developments. In that vein, I trust Capevin minority shareholders will get a full view of the group’s latest financials, as was done for a recently unlisted Mediclinic International.
For now, we are relying on the odd line of commentary in Remgro’s divisional reports. Capevin, as far as I can remember, is a June year-end company — which hopefully means some form of financial results should be published shortly. If another whisky player pitches an offer for Capevin’s remaining assets, I hope we’ll all be in the loop.
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