British drinks giant Diageo Plc is very interested in buying Sweden's Absolut vodka valued at $6 billion and Chief Executive Paul Walsh says he can see solutions to any possible anti-trust problems arising.
We are very interested in Absolut, and the feasibility will be linked to the level of interest, Walsh told Reuters in an interview on Wednesday. He added the potential of the vodka brand will only be known when financial details are released.
We can see solutions in all jurisdictions but the complexity will vary from market to market, he said of his interest in the world's number two vodka Absolut when Diageo already owns the best selling brand Smirnoff.
Sweden is pledged to sell off Absolut's parent, the 90-year old state-owned Vin & Sprit (V&S), and four players are keen on buying V&S, including Pernod Ricard, Fortune Brands, privately-owned Bacardi and Diageo.
Absolut is one of the biggest and fastest growing spirits brands in the world and is seen as the crown jewel of Sweden's largest-ever push to privatize state assets, and around half of Absolut vodka is now sold in the U.S.
Walsh added that Diageo had not yet seen full details on V&S but he expected all likely buyers to be contacted in October by investment bank Morgan Stanley which has been charged with organizing the sale of the Swedish business.
Walsh said Absolut was not a must have acquisition, but would be a good bolt-on deal, subject to seeing the financial data, which he expected in October. He added that he had not visited Sweden in connection with the sale of Absolut.
Walsh would not comment on potential concerns from an Absolut deal by European and U.S. regulators, but analysts said Diageo may have more problems in Brussels than in Washington due to the differing way the regulators look at anti-trust issues.
The analysts added the U.S. tends to look more at pricing and a bottle of $25 Absolut is seen in a different category than Smirnoff at $14, while European regulators look at the whole market whether it be for spirits or vodka.
Diageo shares were up 0.8 percent at 10.79 pounds by 9:55 a.m.
Walsh added that he was confident over the group's overall outlook and added the U.S. market was in great shape, while he was pretty confident in emerging markets and added the European market was as good as it had looked for some time.