Cuervo, which is listed under the name Becle, has been contacted by Marathon Partners Equity Management with the suggestion, Reuters claimed earlier this week. The private equity group mooted that the tequila giant would benefit from a review that could include, but is not limited to, a public listing beyond its current presence on the stock exchange in its native Mexico.
The company, whose Proximo Spirits division oversees its spirits portfolio including Jose Cuervo, Kraken rum and Bushmills Irish whiskey worldwide, is around 85%-owned by the founding Beckmann family.
“We believe the most value would likely be created from a strategic merger combination that results in a larger and stronger spirits organisation to better compete on the global stage,” Marathon’s managing member Mario Cibelli was cited by Reuters as having written in the letter. “”Most spirits company portfolios are under-indexed to tequila in the US, and outside of Becle, there is no other meaningful way for competitors to increase their exposure to this popular spirit.”
The Beckmanns, whose ancestors commenced tequila production in 1758, listed 15% of their business in Mexico in early 2017. Today, the company has a market capitalisation of around MXN144.94bn (US$8.59bn).
In sales terms, last year’s US$2.6bn positions the company between Rémy Cointreau, which reported 12-month sales of $1.31bn, and Campari Group ($3.16bn).
Just over nine years ago, and prior to the listing, Cuervo agreed to divest full ownership of the then-jointly-controlled Don Julio tequila to Diageo in return for Bushmills and $408m.
The text of the full letter, which has since been shared publicly by Marathon Partners, can be viewed here.
