Bilyonaryo Lucio Co is expected to use the bulk of the P4.5 billion raised from the follow-on offering (FOO) of The Keepers Holdings Inc. (KEEPR) to take over Bodegas Williams & Humbert (W&H), the Spanish maker of his biggest liquor brand, Alfonso brandy.
KEEPR president JP Santamarina hinted in an interview with COL Conversation about the company using 80 percent of the FOO funds to make a “strategic investment to have better control or firmer hold of the supply and cost of the biggest category that it has in its portfolio right now.”
“That is very fundamental, we need to protect our biggest category,” he added. Aside from this major acquisition. Santamarina said KEEPR was also keen on scooping up local spirits makers that would fill in the gaps in its lineup of brands.
Although Santamarina declined to elaborate, KEEPR’s biggest brand is far and away Afonso which accounted for 70 percent of its sales. Co, through VCF Land Resources, already owns 30 percent of W&H which he bought in 2018.
Abacus Securities reckoned W&H was KEEPR’s main target. In a report, Abacus said: “ Our studied opinion is that management will soon close a deal to acquire Williams & Humbert which produces Alfonso Brandy, among others, The acquisition makes sense because KEEPR has to secure the supply of its most popular product.”
Abacus said the imminent acquisition of W&H (P670 million profits in 2019) would have an immediate positive impact on KEEPR’s bottomline.
Santamiran described KEEPR’s ties with its unnamed producer as a “trading relationship.”
Co, who has been doing business with Bodegas since 1999, has no formal agreement with Bodegas W&H to produce “Alfonso” brandy based on formulation taste, and packaging given by Montosco’s, one of three subsidiaries transferred to KEEPR.
In its prospectus, KEEPR admitted that it might have difficulty in proving its ownership over the Alfonso brand and enforcing its rights and interests due to the absence of a written agreement.
“To mitigate this risk, Montosco is undertaking the formalization of its agreement with Bodegas W&H on a long-term basis and such negotiations toward formal agreements are continuing at the present time,” said KEEPR.
“While the group intends to include provisions for generating revenue from the sales of ‘Alfonso’ in all markets. There can be no assurance that Montosco will be able to successfully conclude formal licensing or other agreements with Bodegas W&H that generate such revenues in the future,” it added.
Co currently does not get any share of the revenues from Alfonso brandy sold by W&H in certain international markets.