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42 below celebrates Bacardi bid

Published: 12:27PM Wednesday September 27, 2006 Source: One News/Newstalk ZB/ Reuters

New Zealand vodka company 42 Below is set to become a financial success story after the global spirits giant, Bacardi, offered to buy it up.

Bacardi, whose brands include Bombay Sapphire gin, Dewar's whisky and Grey Goose vodka, have offered $138 million in cash.

The company began seven years ago when Geoff Ross began distilling vodka from his garage.

The company then built its fortune with inspired advertising on a shoestring budget.

"You know our culture is somewhat irreverent, at times cheeky," says Ross.

42 Below listed on the New Zealand Stock Exchange three years ago with a market value of $60 million.

But despite posting consecutive losses since it floated on the sharemarket it has now more than doubled in value.

"I think it's a terrific achievement. There is something quite distinctive about 42 Below and how they connect with consumers," says financial analyst Rod Oram.

The company spent millions pushing the brand into 25 countries - a threat that prompted Bacardi to snap it up.

Bacardi said it saw 42 Below as a young company with long-term growth potential.

"Bacardi plans to invest heavily in the 42 Below brand portfolio and supporting infrastructure," Bacardi's president and chief executive Andreas Gembler said in a statement.

But Bacardi is adamant that manufacturing will remain in New Zealand, run by the same team to retain its distinctive kiwi spirit.

"It gives a fresh perspective to the super premium and premium vodka segments and actually comes across with a very nice Kiwi irreverence flavour that's not there in the market at the moment," says Bacardi spokesperson Atul Vora.

Bacardi is offering 77 cents per share. 42 Below closed on Tuesday at 53 cents.

42 Below's four founding shareholders, who hold 53% of the company, have committed to the offer and will be encouraging other shareholders to sell as well.

The deal's acceptance now lies with its shareholders.