By Saabira Chaudhuri
Pernod Ricard SA (RI.FR) said it has agreed to buy the maker of Jefferson's bourbon in the U.S. and will open a whisky distillery in China as the liquor giant, which is facing down an activist investor, reported lower annual profits.
Pernod said it would acquire New York-based Castle Brands Inc. for $223 million through a cash tender offer for the listed company's shares. It separately said it will open a malt whisky distillery in China--a promising growth market for alcohol makers--by 2021.
The moves come as the liquor maker faces down pressure from hedge fund Elliott Management Corp, which has amassed shares to become one of Pernod's largest investors, to accelerate returns. Elliott says that Pernod has lost market share in key drinks, underperformed peers on key metrics and should raise its operating margin.
The French company whose brands include Chivas whisky and Absolut vodka announced a share buyback on Thursday of up to EUR1 billion and said it was raising its dividend. It has also nominated two new external directors to its board following criticism from Elliott. The firm, which ranks among the world's biggest hedge funds and one of the most prominent activist investors globally, had argued that Pernod's board was too French and insular.
Pernod Ricard reported lower annual profits on Thursday as costs, including advertising and financial expenses, climbed. Net profit for the year was 1.46 billion euros ($1.62 billion) down from EUR1.58 billion the year prior. Sales climbed to EUR9.18 billion from EUR8.72 billion. For fiscal 2020, Pernod Ricard is targeting organic growth in profit from recurring operations between 5% and 7%, below what analysts were expecting.
Anthony Shevlin contributed to this story
Write to Saabira Chaudhuri at Saabira.Chaudhuri@wsj.com
(END) Dow Jones Newswires
August 29, 2019 03:51 ET (07:51 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.