Pernod Ricard ends distribution deal with Fortune Brands; sells Cruzan rum for $100 million

29 August 2008

French wine and spirits company Pernod Ricard said Thursday that it will stop distribution with Fortune Brands Inc. of Absolut and other Vin & Spirit brands in the US in October, quite a bit earlier than anticipated.

Pernod announced this March that it won the bid to acquire Vin & Spirit, Absolut's parent company.(See: Pernod Ricard acquires Absolut vodka for $8.89 billion)

As part of that deal, Pernod planned to end its distribution agreement with Future brands. The distribution was previously scheduled to end on February 2012. The new termination date is 1 October 2008. Pernod Ricard will pay Fortune Brands $230 million pretax as compensation.

Together with the termination of the distribution, Vin & Spirit of Sweden will also stop being a shareholder in Fortune Brands. Absolut and the rest of the V&S portfolio will join Pernod Ricard USA's portfolio.

Pernod Ricard also said it will sell the premium Cruzan rum brand and related assets to Fortune Brands for $100 million as part of a previously announced plan.

Deerfield, Illinois-based Fortune Brands, which makes Jim Beam and Maker's Mark bourbons, Sauza tequila, Canadian Club whisky and Courvoisier cognac, said separately the Cruzan purchase adds one of the rum category's fastest-growing domestic brands to its stable.

"This is a win-win agreement that provides significant benefits to Fortune Brands," said Bruce Carbonari, president and CEO of Fortune Brands. "In exchange for accelerating the end of our US distribution agreement with Absolut, we'll receive a cash payment of $230 million. We're also pleased that we'll acquire a fast-growing premium rum brand. Rum is one of the most attractive spirits categories, and the addition of Cruzan fills a portfolio gap in premium rum with the category's fastest growing brand in the US."