Management Team Buys Drinks Giant in Scotland's Biggest Ever MBO

Management Team Buys Drinks Giant in Scotland's Biggest Ever MBO A senior management team has today successfully completed the £200 million acquisition of JBB (Greater Europe) Limited through a new company, Kyndal International Limited ("Kyndal"), in the largest ever MBO put together in Scotland. The acquired business, which was a wholly owned subsidiary of Jim Beam Brands Worldwide Inc, part of Fortune Brands Inc., includes the former Whyte & Mackay and Invergordon Distillers Groups. Kyndal, which employs almost 760 people, will retain its corporate headquarters in Glasgow. The business, which has a 9% share of the worldwide Scotch Whisky market, includes the drinks portfolio held by Invergordon Distillers together with brands such as Whyte & Mackay, Dalmore, Isle of Jura, Vladivar, Veba and Glayva. In addition, the company owns:- five malt distilleries at Dalmore, Isle of Jura, Fettercairn, Tamnavulin and Tullibardine; the Invergordon grain distillery; and facilities at Grangemouth and Leith including two bottling and packaging operations The management team, led by Brian Megson, Chairman and Chief Executive, consists of five directors and four senior managers. Together, the management team, who were advised by KPMG Corporate Finance, have subscribed for a 25% equity interest in Kyndal. Financial backing for the transaction has been provided by the Principal Finance Team at WestLB, the German bank, with mezzanine finance provided by Rotch Property Group. Together, KPMG and WestLB created an innovative financing strategy based on the long term value and potential of the business. It was carefully crafted to benefit from low interest rates and a favourable point in the cycle of the whisky industry. In the year ended 31 December 2000, the business being acquired generated operating profit of £20.4 million from sales of £126 million, representing 7.4 million cases of spirits. In addition to its brand sales, Kyndal is the world's leading supplier of private label Scotch whisky. As part of the acquisition, Kyndal has negotiated ongoing trading contracts with Jim Beam Brands. Under these contracts Kyndal will continue to produce and bottle After Shock, currently carried out at Grangemouth, and will continue to sell Canadian Bulk whisky on behalf of Jim Beam Brands in all markets other than the USA. Kyndal has also awarded Jim Beam Brands the exclusive rights to the Dalmore single malt Scotch whisky brand and trademark in the USA. Contracts are in place with Maxxium to cover distribution of specific Kyndal brands. The vast majority of the employees will be retained by Kyndal with approximately 15 jobs being lost through redundancies. Jim Beam Brands has established a new Europe-based operating unit, headquartered in Glasgow, to provide marketing, sales and customer service support for its portfolio of premium and super premium brands that include Jim Beam bourbon, Knob Creek small batch bourbon, After Shock liqueur and Geyser Peak wines. Brian Megson, Chairman and Chief Executive of Kyndal, said "Kyndal is currently the major supplier in a fast-growing segment of the whisky market. As the market consolidates and retailers pursue a global expansion strategy, the company now has the opportunity to further expand its significant business within the whisky industry". "The superb funding deal that has been negotiated allows the management team to concentrate on running and growing the business. Our growth strategy includes looking at acquisitions and also new product development." "We have enjoyed an excellent association with Jim Beam Brands and I am delighted that we will continue a relationship with our previous owners through our ongoing trading contracts." "Kyndal is very much a new beginning for a company with a great heritage and a great team of people. My colleagues and I look forward to a very exciting future." David McCorquodale, Head of KPMG Corporate Finance in Scotland who helped broker the deal, said: "From the outset, KPMG's advisory team recognised that Kyndal's business lent itself to asset based financing. Given the nature of the business, and the fact that this is the largest buy-out in Scottish history, it was apparent that we needed an innovative, responsive lender with the capability to close this transaction within an aggressive timeframe. WestLB were a perfect fit for our criteria and our expectations of their execution of this transaction have been exceeded. We were also delighted that the Rotch Property Group decided to provide the mezzanine finance. The buyout, which features a highly innovative funding package, demonstrates that with the right research, relationships and contacts, exciting deal making opportunities can be created in Scotland. We are confident that this structure, provides management with an excellent platform from which to grow the business and create value." Dr Kenneth Chrystie, Senior Partner with law firm McClure Naismith who acted as legal advisers to the management team said, "This is a landmark deal for Scotland that should be celebrated for its scale, ambition and innovation. It is also reassuring that, despite the current climate, Scotland's entrepreneurs and advisers can engineer and finance such a deal." Date : 16th October 2001 For enquiries please contact: Malcolm Brown, Atlantic PR - 0131 624 0800 or 07831 817752 David McCorquodale, KPMG Corporate Finance - 0131 222 2000 or 07710 579604 www.kyndal.co.uk Note for Editors: The management team consists of: Brian Megson Chairman & Chief Executive Iain Gilchrist Sales Director Ron MacEachran Finance Director Alan Mackie HR Director Ian Palmer Operations Director Glen Gribbon Marketing Director Jim Hanlon Company Secretary Scott McCroskie Financial Controller Nick Swan Commercial Director ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/16/20011016BIT00960/bit0001.doc http://www.waymaker.net/bitonline/2001/10/16/20011016BIT00960/bit0001.pdf