While Singapore’s Temasek Holdings taking 20 percent of the offer, more than $700 million in an initial public offering is being planned to be raised by Mexican tequila maker Jose Cuervo according to an investor presentation that was revealed very recently.
The business IPO presentation showed that in its delayed Feb. 8 initial public offering, priced at between 30 to 34 pesos per share, Jose Cuervo will offer 476.6 million shares.
After the election of U.S. President Donald Trump and sent the peso to record lows, the world’s biggest tequila maker had been forced to put its IPO on hold twice last year.
With the aim of utilizing majority of the proceeds toward general corporate purposes and potential acquisitions to fuel global expansion, the company plans to offer some 15 percent of the total offering for an “overallotment option” that will be provided to international investors based on demand for the offer.
As long as the price per share remained within the range, Aranda, a subsidiary of Temasek, committed to subscribing to 20 percent of the offer.
The Aranda’s pre-IPO commitment would help bolster Cuervo. Since such deals help provide stability to companies by locking in buyers amid market uncertainty, they are common in major Asian flotations.
There were no comments available from Jose Cuervo. The 20 percent commitment valued at about $175 million was confirmed by a spokeswoman for Temasek.
With just barely a week in office, Trump have given indications that he will continue with his promise and threats to slap hefty taxes on companies shipping products from Mexico to U.S. markets and to renegotiate or scrap the North American Free Trade Agreement with Mexico and Canada.
The more pro-dialogue approach from Trump towards Mexico than previously feared which has boosted Mexican shares or an upcoming acquisition that will require a cash boost could be the reason for the timing of the move, MetAnalisis analyst Gerardo Copca said.
“The governments of Mexico and the United States are going to dedicate themselves to negotiation and that creates confidence. Mexico’s stock market has shown that recently,” Copca said.
Approaching levels not seen since early November, Mexico’s IPC index has notched three straight days of gains.
The U.S. election could lead to renegotiation of trade deals, which could have a serious impact on its business, Jose Cuervo warned in a prior IPO filing with regulators.
Jose Cuervo says it is North America’s oldest continuous producer of spirits and was started by Jose Antonio de Cuervo in 1758 before Mexican independence from Spain.
The business is now controlled by the Beckmann family, which will remain the majority shareholder after the IPO and the company originated in the picturesque town of Tequila in Jalisco state and it controls 30 percent of the global tequila market.
(Adapted from CNBC)