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
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
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
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.
Fool contributor Anders Bylund holds no position in any of the companies discussed here, but he does have a bottle of Absolut in his freezer. You can check out Anders' holdings if you like. Foolish disclosure is odorless, colorless, and flavorless by law. Diageo is a Motley Fool Income Investor recommendation.
More from The Motley Fool
Don't Get Too Worked Up Over Fortune Brands' Earnings
All cash flow is not created equal.
3 Special Situations You'll Want to Watch Closely
These breakups look likely to provide great value.
Breaking Up Is Fun to Do
When a company plans a breakup, investors have plenty of good options.