Swedish company Cefour Wine & Beverage is currently in-play as we have recently written about. A Croatian company is doing a due diligence right now and Cefour stated on Tuesday July 30th, that it has been discussed that the bid must be in the region of 0,40 – 0,45 SEK per share, which corresponds to a company’s valuation of about SEK 170 – 195 million. The Croatian company is apparently keen to integrate Cefours packaging solution in its existing activities and sees a takeover of Cefour as an opportunity to achieve synergies and access Cefours global sales channels with their own wines to reach a global market.
Today, Cefour announced that it has sold the licensing rights for advertising on its Easy Wine Glass to Shabacker Investment Group AB. The licensing rights are for Serbia, Montenegro, Macedonia, Bosnia and Croatia. Seems has if activity is high for Cefour in this region and therefore it might not be too surprising that the Croatian company wants to get its hands on Cefour.
During the production process, Cefour can apply logo types on the side of its glasses. The advertising will primarily be done by betting companies which are active in the countries affected by today’s deal. Cefour expects to sell around 2.5m glasses per year in this region which implies a contract value of SEK 1m, to be paid in advance. This leads to a margin improvement of SEK 0.4 per glass in these markets, according to Cefour. The contract is valid from 01/09/2013 until 01/09/2014.
Says Cefour COB Mats Krönlein: “We have been looking for these new revenue streams for Cefour for a while. Advertising on the glasses can be applied in additional countries as well of course, which can generate additional income for the company.”
The Cefour share is currently trading at SEK 0.31, i.e. 23 -31% below the indicative bid level. A continuation of the due diligence process will take place August 13-14th at Cefour’s headquarters in Ahus, Sweden. Operationally, things are going very well for Cefour and today’s announcement is further proof of that. The facts that the contract is related to the region of former Yugoslavia and the potential bidder is from Croatia is hardly a co-incidence, in our opinion.