Campari to get a 49% stake in Tannico to expand its e-commerce unit amidst COVID-19

Campari (BIT: CPR) said on Friday that it plans on buying a 49% stake in Tannico. The Italian drinks group is seeking to expand its e-commerce business with a stake in the online company for wines and spirits amidst the ongoing Coronavirus pandemic that has restricted people to their homes. Campari recently partnered with 3 of the leading bars to create an at-home experience.

At £6.60 per share, Campari is currently 40% down year to date in the stock market after recovering from £4.98 per share in March. The £7.6 billion company has a price to earnings ratio of 28.06.

Campari will initially get a 39% stake in Tannico

According to Campari, the deal has already been finalised with Tannico’s owners. The Sesto San Giovanni-headquartered company will initially get a 39% stake in Tannico’s capital. The rest of the investment, Campari added, will be made at a later stage that will increase its stake to a total of 49%. The overall agreement is priced at £20.85 million.

As per the terms of the agreement, starting from 2025, Campari will also have an opportunity to further increase its stake in Tannico to 100%. CEO Bob Kunze-Concewitz commented on the deal on Friday and said:

“By leveraging Tannico’s expertise, we will accelerate our development plans in e-commerce, an already growing channel, but set to become even more strategic following the likely long-lasting changing consumer behaviours due to the COVID-19 emergency.”

Italy’s Tannico recorded £18.37 million in sales last year. Its average growth in the past three years currently stands at 50%. The company has more than 2,500 wineries (domestic and international combined) and offers roughly 14,000 wines globally.

Spirits companies are relying on digital sales amidst COVID-19

The Coronavirus pandemic that has so far infected more than 6.8 million people worldwide and caused a little under 400,000 deaths, fuelled a sharp increase in the demand for online retail services as governments resorted to lockdowns to minimise the fast spread of the novel flu-like virus. Wines and spirits businesses have started relying on digital sales to compensate for an unparalleled decline in consumption at restaurants and bars.

Chiomenti Studio Legale and Vitale & Co served as advisers for the deal to Tannico. Campari received such services from McDermott Will & Emery and Pedersoli Studio Legale. Before finalising its agreement with Campari, Tannico commented, it had received multiple offers from other international beverage companies.

The advisers further highlighted that negotiations for the Campari-Tannico deal began before the pandemic and accelerated amidst the health crisis that skyrocketed online sales in recent months.