7 May 2010 16:47

CEDC: synergy from merger of Parliament, Russian Alcohol at $10 mln-$15 mln

MOSCOW. May 7 (Interfax) - Polish Central European Distribution Corporation (CEDC) has estimated the synergy from merger of its two Russian assets, Parliament and Russian Alcohol Group, at $10 million-$15 million.

"We have been extremely focused on finishing the integration of Parliament and the Russian Alcohol Group which is still scheduled to be completed by next month. We continue to see strong cost synergies of approximately $10 million-$15 million in Russia coming out of the business as well as better than expected improvements in our core input costs," President and CEO William Carey is quoted in the press release as saying.

"With the expected sale of the distribution business [scheduled to close in the third quarter] our net income is expected to be weighted 70% for Russia and 30% for Poland and Hungary," Carey said.

"The Company's much stronger balance sheet resulting from the distribution spin off also enables us to take part as a bidder in the potential sale of the Nemiroff Company [Ukraine] for which a sale process is currently underway," he said.

CEDC almost doubled sales in the first quarter of 2010 to $330 million, up from $184 million in the first quarter last year (or to $149.8 million from $70 million, net of alcohol excise taxes). Net profit equaled $11.5 million in the quarter compared with losses of $90.9 million in the same period last year.

CEDC is one of Poland's leading vodka distillers and distributors. Its brands include Zubrowka, Bols and Soplica. CEDC distributes over 700 brands, including Remy Martin, Jagermeister, Metaxa, Corona, Foster's, Jim Beam and Guinness. The company's shares received a listing on the Nasdaq Global Select Market in August 1999.

CEDC and Lion Capital acquired about 90% of shares in Russian Alcohol Group in July 2008. CEDC purchased 42% of shares for $181.5 million and its partner, Lion Capital, bought a controlling stake. The Polish company later reached agreement to purchase Lion's stake. CEDC also owns Parliament, a vodka distiller and the distributor of Whitehall Group products.

Russian Alcohol produces vodka brands Zelyonaya Marka, Zhuravli, Marusya, Chorny & Mikola and others, as well as pre-mixed alcoholic beverage brands VDK, Bravo, Gordon's and Doza.