Absolut Hangover for Fortune Brands

The worldwide auction for Absolut Vodka parent AB Vin & Sprit is officially under way, and it could land as much as $6 billion as the state-run business is spun out to the best bidder.

Note that I'm not saying highest bidder. This operation is near and dear to the hearts of Swedish voters, and therefore to the politicians in charge of the auction. U.S. distribution partner Fortune Brands (NYSE: FO  ) is said to have an economic advantage, since any other acquirer would need to pay Fortune some $400 million in fees to break that distribution deal -- or else pay Fortune a fortune for keeping the partnership going. But that buyout bonus might not be enough.

This is a complicated deal, both politically and strategically. Some Swedish analysts believe that Fortune would simply buy Vin & Sprit for the valuable Absolut brand name, relocate production from the traditional distillery in southern Sweden, and drop the rest of the package like a bad habit. Other potential or confirmed foreign bidders like Pernod Ricard, Diageo (NYSE: DEO  ) , or Constellation Brands (NYSE: STZ  ) would probably do the same thing, considering the infamously high cost of labor in Sweden and the logistical complications of such a small production facility, an ocean away from the vital North American liquor market. Sweden consumes only 3% of the Absolut volume it creates.

But the super-premium vodka is such a cash cow that Vin & Sprit is among the most profitable brewers -- or indeed businesses -- in the world, counting by net profit per employee. Two thousand benefit-hungry Swedes generated a $250 million in profit in the last 12 months, or $125,000 per Viking.

On a trailing-12-month basis, Diageo pulls in $127,000 per person, while Brown-Forman (NYSE: BF-B  ) only manages $100,000. Constellation keeps $32,000 per employee, and Fortune no more than $31,000. So even without stripping down and relocating the company, any of those would-be buyers would upgrade their profit engines a bit.

This isn't merely an academic exercise, because there's a legit local bidder in Investor, the investment instrument of the Wallenberg family -- the country's closest thing to the Rockefellers. If Investor wins, the government gets credit for saving 2,000 local jobs and lots of national pride, which complicates the process quite a bit. The Wallenbergs would probably keep Absolut to themselves and sell off the smaller brands to local buyers.

Fortune might have to overpay tremendously to overcome the political incentives. Even the finest vodka isn't worth that headache, I think.

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