Bitters maker buys Burn Stewart

Angostura, the Caribbean company best known for its bitters, is to take over the Scotch whisky maker Burn Stewart in a deal valuing the company at around £48.9 million (€75.9m). The friendly bid had been expected for some time.

Angostura, a subsidiary of diversified holding company C L Financial, already owns 28.9 per cent of Burn Stewart and has received undertakings from the company's directors and other shareholders holding a further 28.9 per cent, giving it a majority stake of around 52 per cent.

The Burn Stewart board has recommended that other shareholders accept Angostura's offer, which is at a considerable premium (116 per cent) to the company's share price prior to the offer being made and 21 per cent higher than its closing share price on Friday last week.

Angostura said the total it would be likely to pay for all the outstanding shares was around £34.8 million.

The deal is part of C L Financial's stated aim of becoming "a major participant in the global spirits business"​ and is designed first and foremost to reduce the company's reliance on both local Caribbean markets and products, namely rum.

In particular, C L Financial is keen to develop the Angostura brand name, which has been established for almost 200 years, and to expand Angostura's distribution network on a worldwide basis. The company said that the limited opportunities in its home market (Trinidad and Tobago) meant that this would mainly be achieved through acquisition. However, Angostura is also convinced that it will be able to increase its 20 per cent share of the local market through regional consolidation and new product launches.

Once the takeover is complete, C L Financial said it would merge its existing spirits businesses with those of Angostura, including Burn Stewart, to form a new branded spirits company based in Scotland and headed by Ian Bankier, Burn Stewart's group managing director. It stressed that no redundancies or other major changes were expected at Burn Stewart.

Although Angostura is perhaps best known on the international stage for its aromatic bitters, its principal business is the production and sale of rum. As well as Burn stewart, it has a stake (54 per cent) in Florida-based Todhunter International, another rum maker.

It will be interesting to see how Angostura and C L Financial look to develop the Burn Stewart business, whose main brand is Scottish Leader, hardly one of the best-known blends on the market. That said, Burns Stewart does have a solid private label business, as well as a strong brand, Scotch Blue International, in the important Korean market, one of the fastest growing in the world and one in which Burn Stewart hopes to perform well. It also owns the malt brands Tobermory, Deanston and Ledaig.

The company posted losses of £0.8 million in the year to 30 June, an improvement on the previous year helped by an increase in turnover to £40.4 million. While this is in part due to the company focusing primarily on the value end of the Scotch whisky market at a time when all the growth has been in single malts or premium blends, it is also indicative of the fact that Burn Stewart's main international markets are in places such as South America or South Africa, where the economies have been far from solid.

So, while Angostura will benefit from the existing international network of Burn Stewart, the whisky maker is also likely to benefit from the strength of the Angostura brand and the added investment from C L Financial.