Investment: Highland in pounds 800m link-up with Remy

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The Independent Online
HIGHLAND DISTILLERS, the scotch maker, yesterday moved to boost its presence in the global drinks market with a pounds 800m distribution agreement with the French group Remy Cointreau and Jim Beam of the US.

The joint venture will operate in all major markets outside the US to promote and distribute premium brands, including Remy Martin cognac, Famous Grouse and Macallan whiskies, Jim Beam bourbon and Piper Heidsieck champagne.

Highland said the deal would "significantly" cut distribution costs and boost sales. But it is set to lead to some job losses in the three groups' 150-strong UK distribution workforce. It also deepens ties between Highland and Remy; the French group already owns 9.4 per cent of highland, which in turn controls 2 per cent of Remy.

Under the joint venture, which will have turnover of pounds 800m, the three partners will each inject assets and cash worth pounds 75m. Highland will put in its distribution network and sales force, valued at pounds 45m, and pounds 30m cash. The funds will come from the repayment of a pounds 90m bond from Remy Cointreau.

News of the venture offset Highland's disappointing interims, sending the shares 0.5p higher to 232p. Pre-tax profits slipped 6 per cent to pounds 23.5m as demand for cheaper whiskies was hit by the Asian downturn. Analysts downgraded full-year forecasts from pounds 45m to pounds 42m, leaving the shares on a forward multiple of about 10. With the new deal they are worth holding despite the uncertain market conditions.