Marathon Partners urges Becle to move share listing, consider alternatives

Becle SAB de CV

06/03/2024 13:00

By Svea Herbst-Bayliss
       March 6 (Reuters) - Marathon Partners Equity Management
wants spirits company Becle SAB de CV  CUERVO.MX , the world's
largest tequila producer, to move its listing from Mexico to the
United States or review strategic alternatives, including a
possible sale, according to a letter seen by Reuters.
    The Mexican company's stock, which has traded on the Bolsa
Mexicana de Valores since 2017, is "significantly undervalued"
and management should either relist it on another exchange or
consider bolder steps, including a sale to a bigger rival, Mario
Cibelli, Marathon Partners' managing member, wrote to the board.
    The letter, sent last month, was seen by Reuters this week.
    Becle is valued at $8.5 billion and roughly 85% of the
company is owned by Chief Executive Officer Juan Domingo
Beckmann and his sister. The remaining 15% is held by investors
including Marathon Partners, which owns 15 million shares, and
others including Fidelity and Southeastern Asset Management,
regulatory filings show.
    The move by Marathon Partners, which calls itself a patient
and supportive investor at Becle, is a rare example of
shareholder activism in Mexico. 
    Cibelli said in his letter that he was reiterating his
earlier suggestion that Becle - the only major spirits company
not listed on a major exchange - relist elsewhere to improve
liquidity and allow management to repurchase shares more easily.
    If management is not ready to do that, it may be time for
bigger steps, Cibelli wrote.
    "We believe the most value would likely be created from a
strategic merger combination that results in a larger and
stronger spirits organization to better compete on the global
stage," Cibelli wrote.
    A Becle representative did not immediately respond to a
request for comment.
    Becle's portfolio includes the popular Jose Cuervo tequila
brand as well as the Great Jones Whiskey and Boodles Gin brands.
    "Most spirits company portfolios are under-indexed to
tequila in the U.S., and outside of Becle, there is no other
meaningful way for competitors to increase their exposure to
this popular spirit," Cibelli wrote.
    He also wrote that the company's total return since it
listed shares seven years ago has dramatically lagged rivals
Davide Campari Milano  CPRI.MI , Brown-Forman  BFb.N , Pernod
Ricard  PERP.PA , Diageo  DGE.L  and Remy Cointreau  RCOP.PA .  
Diageo bought actor George Clooney's high-end tequila brand,
Casamigos, in 2017.

 (Reporting by Svea Herbst-Bayliss in Providence, Rhode Island
Editing by Matthew Lewis)
 ((svea.herbst@thomsonreuters.com; +617 233 2138; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))