C&C is likely to bid for Diageo brands

Cantrell & Cochrane, which was the subject of a £580 million (€736.44 million) venture capital-backed management buyout earlier this year, is likely to be one of the bidders for some of the spirits brands that may be sold by drinks giant Diageo.

Diageo has appointed investment bank Warburg Dillon Read to contact potential buyers of its Asbach German brandy, Metaxas Greek brandy, Cinzano vermouth and sparkling wine and Vecchia Romagna Italian brandy brands.

A spokesman for Diageo said that the brands are being marketed separately to potential buyers, but that did not preclude a sale of the four brands as a single unit. He also emphasised that unless it received offers deemed appropriate, the brands would not be sold.

The decision by Diageo to test the market for the four brands follows previous brand sales earlier this year. In February, Diageo sold a number of Canadian whiskey brands to Carandaigua for $185 million, a sale that was quickly followed by the sale of another six brands in North America. Yesterday, Diageo also sold four ouzo brands to Campari for an undisclosed sum.

C&C chief executive, Mr Tony O'Brien said yesterday his group would be an interested party, but accepted there might be competition for the more attractive Diageo brands from the likes of Pernod Ricard, Seagram and Bacardi.

C&C already has liqueur interests in Italy - Frangelico liqueur and Aperol aperitifs - and so might be interested in the Vecchia Romagna brandy, which sells 500,000 cases a year. Cinzano is the number two vermouth brand behind Martini and sells 4.5 million cases of vermouth and asti sparkling wine.

He added, however, that both Cinzano and Vecchia Romagna had been on the down-slope for some years and that the price-tag for these brands would have to reflect their slippage. Mr O'Brien said that Metaxas had attractions because of its size - around one million cases a year - and its presence in the Greek and German markets.

Diageo and Allied Domecq are increasingly focusing on global brands and, in Diageo's case, this means Johnnie Walker and J&B scotch, Smirnoff vodka, Gordon's Gin and Bailey's Irish Cream.

A spokesman for Diageo declined to break down the profits of the various brands, but said that they had combined profits - after marketing and promotion costs - of £60 million sterling last year.

Analysts have put a combined value of £300-350 million on the four brands, a price tag that Mr O'Brien said was "a bit rich for my liking".

Mr O'Brien has already said that the group could comfortably handle an acquisition in excess of £100 million. C&C's main backers, British venture capital group BC Partners, also said at the time of the management buyout that it would fully support C&C's plans to grow the business both organically and by acquisition.

As well as looking to drinks brands being sold off by the multinationals, C&C has also indicated that it plans to move into food distribution.