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UPDATE 2-Oaktree selling vodka-maker Stock Spirits -sources

Published 01/13/2011, 12:24 PM
Updated 01/13/2011, 12:28 PM

* Stock makes Poland's Czysta De Luxe vodka, Stock 84 brandy * Could draw buyout firms, trade rivals; IPO also possible * Credit Suisse advising on "strategic options"

(Adds detail on valuation, Oaktree's European fundraising)

By Quentin Webb and Simon Meads

LONDON, Jan 13 (Reuters) - Oaktree Capital Management will this month begin an auction of Stock Spirits, a $1 billion-plus central European drinks company, sources said, in a sale that could interest private equity firms and rival drinks companies. Oaktree, the Los Angeles-based investor, has not definitively decided to sell Stock Spirits, and is also considering an initial public offering (IPO) of the company, two people familiar with the matter said.

In November, Stock Spirits, whose drinks range from high-end Polish vodka Czysta de Luxe to Czech plum brandy said it had hired Credit Suisse to advise it on "future strategic options". A month earlier, the Sunday Telegraph said the firm was interviewing advisers ahead of a planned 1 billion euro London listing in early 2011.

Buyout firms with regional or sector experience that could consider bidding include Advent International, CVC, TPG, Warburg Pincus, and Lion Capital, which sold Russian Alcohol Group to Stock's listed rival Central European Distribution Corp in 2009.

Oaktree and Stock Spirits declined to comment.

The world's two biggest spirits groups, Diageo Plc and Pernod Ricard SA, also declined to comment, but industry sources said both had strong positions in vodka and were unlikely to be interested in bidding.

Diageo is in preliminary talks about buying Mey Icki, TPG's Turkish raki maker, people familiar with the matter said last month.

EARNINGS

Stock made earnings before interest, tax, depreciation and amortisation (EBITDA) of 62.3 million euros in 2009, up 46 percent on the previous year, on revenue of 262 million.

Pernod trades at an enterprise value of about 12.5 times forward EBITDA, according to Starmine data, while Diageo is on 10.7 times and lower-margin CEDC is on 9.9 times.

The people said Stock's EBITDA is now in the "high 60s" millions of euros -- meaning those ratios imply a price range of about 700 to 875 million euros ($920 million to $1.15 billion).

Oaktree, which also invests in high-yield and distressed debt, is raising its third European fund, of up to 3 billion euros, people familiar with the matter said in December.

($1=.7610 Euro)

(Additional reporting by David Jones and Victoria Howley; Editing by Steve Slater and Erica Billingham)

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