Stolichnaya valued at US$3 billion

Stolichnaya could become the latest big brand to be bought, with a potential bidding war on the cards. SPI Group, the vodka’s Russian owner, have hired American investment bank Lehman Brothers to explore the possibility in detail. It is thought that the frontrunners for the brand, valued at up to US$3 billion, would include Bacardi, Campari and Fortune Brands. 

At the moment all parties are remaining tight lipped, and it is not known whether the entire brand will be sold, or just the distribution rights; though there are some that believe that Lehman has been working on a possible deal for Stoli for a long time. The rekindling of a possible deal may be down to the recent Pernod Ricard purchase of Vin & Spirit, owners of Absolut.

After announcing the V&S deal, Pernod said that it would sell its international distribution rights to Stoli once the deal closes. Pernod currently distributes Stoli in every market outside of Russia, rights it obtained when it acquired the British distributor Allied Domecq in 2005.

Although Pernod would have the rights to buy Stolichnaya should SPI sell it, the main contender would probably be Fortune Brands. They were considered the top contender for Absolut, but were beaten to the punch by Pernod, who would be less likely to launch a rival bid for Stoli as a result. Now, with Fortune eager to acquire a major vodka brand, and armed with a significant amount of money after the sale of its wine business to Constellation, it would appear to be in the driving seat.

Any deal will not be smooth however. Pernod were in negotiations with the Russian government for three years to acquire the entire rights to Stolichnaya, but they were unable to do so.

Vladimir Putin actually brought legal proceedings against SPI in 2001, to try and bring Stolichnaya into state control, and the potential problems don’t end there. The Russian state Soyuzplodoimport company, who owns the rights to the Stolichnaya brand name in Russia, are disputing SPI’s rights to the trademark.

SPI belongs to the businessman Yury Shelfer. It has distilleries in Tambov and Kaliningrad, and in 2006 the company’s turnover was $300 million. Soyuzplodoimport was founded in 2001 by decree of the Russian government, and they have been pursuing legal proceedings to gain the foreign rights to the Stolichnaya name since their inception.

Alexis Hercules 18/06/08