Diageo pays up to $1bn for George Clooney tequila brand

Sale of Casamigos underscores revival of tequila and mescal

Agribusiness & Food

Wed, Jun 21, 2017, 20:21 Wed, Jun 21, 2017, 20:21

An upmarket tequila brand launched four years ago by Hollywood actor George Clooney and two of his friends has been valued at up to $1 billion in an agreed offer from Diageo, the UK-based drinks group that owns Guinness.

Casamigos, which the actor founded with Cindy Crawford’s husband Rande Gerber and flamboyant real estate developer Mike Meldman as a side project, instantly enjoyed the backing of America’s rich and famous, helping propel the brand to sales of 120,000 cases in 2016, mainly in the US.

The deal underscores the revival of tequila and mescal as trendy spirits, which is seeing companies in the sector command lofty prices. Earlier this month, France’s Pernod Ricard agreed to take a majority stake in Del Maguey Single Village Mezcal.

Diageo will pay $700 million (€627m) for Casamigos, which loosely translates as “house of friends” and is largely controlled by its three founders, when the deal closes. An additional $300 million (€269m) is payable depending on the performance of Casamigos over 10 years.

Tequila has until recently represented a gap in the drinks cabinet of Diageo, which sells nine labels of American and Scotch whisky but just two brands of the Mexican spirit. Casamigos will sit alongside the company’s Don Julio tequila brand, which has registered double-digit growth in the year to June 2016.

Diageo plans to keep Mr Clooney and his partners on board, and hopes to use its international reach to speed up Casamigos’ growth.

Sales of super-premium tequila brands grew nearly 600 per cent in the US between 2003 and 2015, according to the Distilled Spirits Council of the United States, far outpacing other spirits.

Mexico’s top tequilas have led the growth, with volumes of ultra-premium tequila rising 35 per cent in 2016 compared with 2015 to make up a third of tequila’s $7 billion global sales, according to the IWSR, the London-based authority on the drinks trade.

– The Financial Times Limited 2017

Demand for AIB shares from public well below early speculation

Price range of IPO narrowed to €4.30 to €4.50 on Wednesday

Financial Services

Joe Brennan

Wed, Jun 21, 2017, 18:57 Wed, Jun 21, 2017, 19:49

Small investors will pick up 10 per cent of AIB shares being sold by the State in the bank’s initial public offering this week, as the level of demand from the general public has come well below what had originally been speculated.

That equates to about €300 million of shares, based in the mid-point of a range between €4.30 and €4.50 at which the shares are expected to price on Thursday evening ahead of the bank’s flotation on the main stock markets in Dublin and London. It would value the bank at just under €12 billion.

The new price range, issued on Wednesday evening by investment banks working on the deal, marks the second narrowing of the spread in as many days. The original range was set last week at between €3.90 and €4.90 per share, which would have valued the bank at up to €13.3 billion.

Investment bankers working on the deal said that they have secured orders throughout the latest price range to cover all the shares being sold.

The State, which seized AIB in 2010 to prevent the bank from collapsing under the weight of spiralling bad loans, initially plans to sell a 25 per cent stake in the IPO. The investment banks have an option to acquire a further 3.8 per cent of the bank and place the stock on the market.

While it had been reported soon after the Government announced plans last month to proceed with IPO that retail investors may apply for up to €900 million of shares, sources said that the final orders level from this category was about €400 million. An allocation of €300 million means small investors will receive, on average, 75 per cent of the shares for which they applied.

One source close to the process said that the final figure reflected the fact that would-be investors had to commit a minimum €10,000 to participate in the transaction.

While the order book for small investors closed on Wednesday, larger investors have until noon on Thursday to submit their offers.

Institutional investors, including pension funds and asset managers, can set the maximum price within the range that they would be willing to buy AIB stock. However, smaller investors had to commit to buying shares at the final price of the IPO that will be set by the Government and its advisers.

Financials weigh on European shares while oil drags US markets

Ireland’s benchmark index drops marginally, performs better than Europe’s Stoxx 600

Markets

Peter Hamilton

Wed, Jun 21, 2017, 18:14 Wed, Jun 21, 2017, 18:14

Irish shares dropped slightly on Wednesday, or by 0.08 per cent, broadly in line with trading across Europe.

British shares also slipped as losses among energy stocks and sub-prime lender Provident Financial weighed, while a stronger pound was also unhelpful.

Across Europe, both financial and retail stocks sent shares sliding.

Bank of Ireland was the most traded stock on Wednesday, benefitting from the news flow around AIB’s initial public offering. The stock pushed up by 0.44 per cent to close the day.

With considerably less volume traded on the day, Smurfit Kappa was the biggest percentage gainer on the Iseq 20. One of the company’s peers announced price increases while strong container board demand in Mexico, a significant market, sent the stock up by 1.52 per cent to close at €27.31.

Despite weak oil prices over the past few days, Ryanair dropped by 0.63 per cent on the Irish market. Dublin traders said that profit taking was the cause of the stock closing at €18.62.

Dalata hotel group also closed down, albeit on very low volume, despite good hotel room data showing that revenue per available room in Dublin grew by 7.3 per cent in May. That wasn’t enough to push Dalata upwards and it ultimately closed down by 1.18 per cent.

The blue chip FTSE 100 was down 0.3 per cent at its close, weighed down by another weak session for oil stocks as the oil price headed lower.

The FTSE hit a session low after Bank of England chief economist Andy Haldane signalled he would back a rise in interest rates in the second half of this year, which also sent sterling higher.

Provident Financial was the biggest individual faller, plummeting up to 20 per cent after it warned that disruption from the reorganisation of its consumer credit division would weigh on its results for the rest of the financial year.

Gains by Whitbread and Centrica were a bright spot, however. Costa Coffee and Premier Inn owner Whitbread was the top performer among UK and European shares, up 3.4 per cent after reporting sales rose 7.6 per cent in the first quarter.

London-focused house builder Berkeley Group also made gains among lacklustre mid-caps, up 2.1 per cent after its full-year results beat expectations with a 53 percent increase in profits before tax. However, it warned uncertainty related to Brexit could cut into demand for houses.

Weakness among financial and retail stocks sent European shares sliding again on Wednesday.

The plunge of Provident Financial weighed on sentiment for banks, which were among the top fallers on France’s CAC 40 and Germany’s DAX.

Belgium’s KBC was the worst-performing on the banking index, down 4.01 per cent as its investor day got off to a disappointing start. KBC released a new core equity tier 1 target, a key metric of banks’ solvency, of 16.6 per cent.

Retail stocks were also weighed by Belgian food retailer Colruyt falling 6.71 per cent after its full-year results missed consensus.

Oil prices pared brief gains to trade lower, hovering near seven-month lows, putting pressure on the market. The commodity has fallen 20 per cent this year as a global glut continues to weigh despite efforts by major producers to reduce output. Oil prices are on track for their biggest slide in the first half of any year since 1997.

Biotechs were the biggest gainers on the Dow with Celgene, Regeneron and Amgen trading up between 2 per cent and 5 per cent. Seven of the 11 major S&P sectors were lower, with the energy index’s fall leading the decliners.

The financial sector fell as US Treasury yield curve held near 10-year lows. Goldman Sachs was off marginally and Bank of America fell, ultimately weighing on the Dow and the S&P.

Caterpillar’s fall and General Electric’s decline dragged on industrials.

-(Additional reporting: Reuters)

UCD spin-out company head Tony McEnroe wins start-up award

SiriusXT has developed a microscope that can generate 3D images of biological cells

Health & Pharma

Charlie Taylor

Wed, Jun 21, 2017, 18:00 Wed, Jun 21, 2017, 18:00

Tony McEnroe, chief executive of SiriusXT, a spin-out company from UCD, has been named as Enterprise Ireland’s high potential start-up founder of the year.

Mr McEnroe was presented with the inaugural award at a ceremony in Dublin on Wednesday evening.

SiriusXT has developed and built a bench-top, Soft X-Ray Microscope (SXT100) that is capable of generating high-resolution 3D images of the internal structure of whole biological cells.

Such images can reveal, in unprecedented detail, the inner workings of drugs and disease on a cellular scale and enable scientists to track how drugs and disease affect specific cells.

The SXT100, the first commercial lab-scale SXT microscope of its kind, is built on soft x-ray source technology and has been exclusively licensed by the company.

SiriusXT, a spin-out from UCD’s school of physics, last year secured €3 million in a Horizon 2020 funding round.

The firm was one of nine start-up companies to be selected for the inaugural Award whereby each of the companies Liz Fulham of SalesOptimize and Eoin O’Broin of Solar AdTek were named as runners-up on the night.

The other nominees included Immersive VR Education; Hub Controls; Clubstohire. com; Future Ticketing; Feedpods and TVadSync.

As the overall winner, SiriusXT received a prize valued at €15,000 provided by Grant Thornton to further support the development of the company.

Incorporated in late 2015, SiriusXT was co-founded by Dr Kenneth Fahy, Dr Fergal O’Reilly and Dr Paul Sheridan. The company claimed the title of “best early stage company in Ireland” in the InterTrade Ireland Seedcorn competition that same year.

Mr McEnroe is a former EY Entrepreneur of the Year finalist from his time as managing director of Cork-based Farran Technology.

KBC may sell troubled Irish mortgages to draw line under crisis

Belgian group affirmed its commitment to Ireland in February after years of speculation

Financial Services

Joe Brennan

Wed, Jun 21, 2017, 17:23 Wed, Jun 21, 2017, 17:23

KBC Bank Ireland’s chief executive may sell some impaired mortgages as it comes to the end of restructuring of loans and as banks face mounting regulatory pressure to draw a line under an issue that has weighed on the industry for almost a decade.

Speaking to reporters on the sidelines at an international media and investors day in Dublin for the wider KBC Group, Wim Verbraeken said the bank may look to sell loans in time if it concluded it had “sweated enough and there is no more value for us to extract” from restructuring non-performing loans (NPLs).

Over 40 per cent of KBC Bank Ireland’s €12.4 billion mortgage-dominated loan book was classified as impaired in March, ostensibly the highest level among retail banks in the country.

However, Mr Verbraeken said that the bank applies the strictest classification of NPLs in the country and that the level of loans in arrears stood at €1.7 billion at the end of the first quarter.

While the European Central Bank’s banking supervision arm has pressed the domestic Irish banks in recent months for plans to reduce NPLs, Mr Verbraeken said the ECB is not expected to engage with his bank until the second half of 2017, as the wider KBC Group has a below-average level of troubled loans compared to the euro zone average.

He signalled that the ECB can expect some pushback if regulators don’t recognise that much of the bank’s NPL portfolio is comprised of restructured loans.

In many cases, eased terms have to be in place for up to a year before loans are reclassified as performing. In others, such as split mortgages, where repayments on part of a loan are put on ice until a future date, the “warehoused” portion will continue to be an NPL until it is being paid back.

Mr Verbraeken noted that European regulators were keen at the outset of the crisis for banks to work with customers and not pursue “repossession on a massive scale”.

“And now [for regulators] to turn around and say these loans are staying as NPLs because of restructuring and other features needs to be reconsidered,” he said. “You can’t have your cake and eat it too.”

Brussels-based KBC Group affirmed its commitment to Ireland in February, after two years of speculation about its future in the market. The group, which has more than 1,000 employees in the Republic, also signalled its interest in bank and insurance acquisitions in Ireland to expand its footprint. Mr Verbraeken said that the bank isn’t currently working on a potential acquisition.

KBC Bank Ireland plans to “launch an appealing proposition” for “micro” businesses, such as doctors, dentists and solicitors practices, later this year, as the group uses Ireland as a testing ground for new digital applications.

The bank unveiled a new a new mobile app on Wednesday, reducing the number of steps a customers have to take to set up an account from 26 to five.

The Dublin-based unit, KBC Bank Ireland, aims to almost double its number of customers to 425,000 in the four years to the end of 2020.