Jan 2008 Financial News

Lascelles takes Appleton to number four spot in the world's best rums

Jan 11, 2008

The December announcement by Angostura Holdings Limited of its intentions to buy Lascelles deMercado confirmed years of speculation surrounding an impending sale of the rum-based conglomerate. William McConnell, managing director of Lascelles deMercado, speaking at the Angostura luncheon on Tuesday at the Pegasus admitted that over the years Lascelles had received numerous takeover offers.

"A lot of international players liked what we had done with the company," McConnell said. What Lascelles management had done was take the Appleton brand to the number four spot in world of rums. Local analysts noted that once Lascelles sold over one million cases of Appleton on the international market it would be subject to buyout offers.
In fact, on August 25, 2006, this newspaper reported that speculators believed that Latin American buyers had offered US$5 per share. At the time, Lascelles managers denied such a deal was in the making.

The actual deal from Trinidadian-based Angostura was even more generous than what speculators had suggested. McConnell noted, "An opportunity came up with Lawrence Duprey, chairman of Angostura, that would give Lascelles a huge future." He continues, "I'll be honest, once I reviewed what Duprey was offering, I took the proposition to our chairman, George Ashenhiem." McConnell stated that Ashenhiem insisted that if they were going to sell the company's preference shares to Duprey, then all shareholders must get the same opportunity.

"We wanted to give the Lascelles shareholders an opportunity to exit if they wish," McConnell stated. "Duprey said that if it can be done then we should find a way."

According to the terms of the offer, Lascelles deMercado shareholders who choose to sell to Angostura will get US$10.65 per ordinary share US$0.30 a share for its preference shares. The payment will be in two tranches with US$4.50 up front, the remainder up to three years from now, closing in February 2011. The offer will close on January 28.

Michael Carballo, Angostura company secretary, noted that the deferred arrangements does not mean that Angostura will actually take three years to pay off the balance. "The three year deferment is a maximum window. It is not quite likely that the deferment will last for three years." Carballo also noted that once the deal is consummated, it is possible that Lascelles shareholders may, over time, get Angostura shares. Another possibility is for Lascelles and Angostura to become a merged entity and be listed on the Caribbean and New York or London stock exchanges. "There are many opportunities opened to us," Carballo stated, "once the deal is completed".

McConnell noted that while his contract as managing director will continue for the next three years he is of the view that with Angostura on board, "the future of Lascelles is up to the brilliance of the new people getting in."

Overall, McConnell characterises the Angostura deal as, "honourable people allowing honourable people to do honourable things".

Angostura Holdings had its beginnings in the Napoleonic era. After the Battle of Waterloo in 1815, German doctor Johann Siegert left Europe for South America where he began to experiment with native herbs. By 1824, Siegert settled in the Venezuelan town of Angostura and created his Amargo Aromatico or aromatic bitters. Angostura Bitters became popular in England and Trinidad by 1850s. Today, the Angostura brand is distributed in 180 countries. Lascelles international flagship brand, Appleton Rum, was established in 1749 and is the world's second oldest rum brands.

Lascelles' local dominant rum brand was established in 1825 when John Wray and his nephew, Charles James Ward, opened a tavern near the Ward Theatre in Downtown Kingston and began selling rum under the name J Wray & Nephew.

Lascelles deMercado acquired the Appleton brand and lands in 1957 and the J Wray & Nephew brands in 1989.

Source:
Dennise Williams
The Barbados Advocate
Friday, January 11, 2008

http://www.jamaicaobserver.com/magazines/Business/html/20080110T220000-0500_131278_OBS_LASCELLES_TAKES_APPLETON_TO__NUMBER_FOUR_SPOT_IN_THE_WORLD_S_BEST_RUMS___MCCONNELL_.asp