When Mexican drinks firm Jose Cuervo, the largest tequila firm in the world and over two centuries old, acquired Bushmills from Diageo, a major integration project began with the help of Bank of America Merrill Lynch (BofAML).
The distillery in the village of Bushmills, County Antrim, Northern Ireland, has been producing whiskey for more than 400 years, making it the oldest licensed distillery in the world. In November 2014, the latest chapter in that long history was opened when Mexican drinks firm Jose Cuervo announced its intention to buy Old Bushmills Distillery and the whiskey brands it produces from Diageo PLC, as part of a deal that also included the transfer of its Don Julio Tequila brand to Diageo. The deal itself required $750m in cash from Jose Cuervo, of which $250 million was provided by BofAML in the form of a bridge loan. By February 2015, all the pieces were in place and the acquisition was completed.
DEVELOPING A COMPREHENSIVE STRATEGY
For Jose Cuervo, the venerable distillery represented not just its first foray into the whiskey market, but also its first production center in Europe. Maria Loria, the Mexico-based corporate treasurer of Jose Cuervo, faced a clear challenge: how to develop a global treasury strategy to integrate and gain full control of Old Bushmills operations, halfway across the world. As Loria worked with BofAML, this challenge grew into a more comprehensive project. Not just the requirement to integrate two businesses separated by over 5,000 miles, different systems and two languages, but to transform the treasury function into a truly global operation.
As part of the sale agreement, Diageo was to continue handling payments and receivables for Bushmills under a service agreement for a period of a year after the sale. Yet while this service agreement with former owner Diageo ensured continuity of payments and receivables, Loria still needed clear visibility into Bushmills’ accounts, which BofAML made possible through its CashPro® Portal.
NEW SOLUTIONS FOR PAYROLL AND CARDS
At the same time, payroll needed to be moved out of Diageo. “It was a rush, but we helped them to obtain a BACS ID and to process their payroll through us. By the second month following the acquisition, Jose Cuervo started processing the payroll themselves,” recalls Fabio Monico, treasury sales officer at BofAML. The team in Bushmills could now use their outsourced payroll services firm to prepare the calculations, ready for payment to be authorized in Mexico through CashPro.
Yet another urgent problem was that, on the day of the transfer, all the corporate cards used by Bushmills were canceled. Again, Loria turned to BofAML for a speedy replacement. “It was a huge challenge for Jose Cuervo,” says Monico. “They had to sign new agreements because all the expenses of the distillery itself were embedded to those cards. We managed to provide them with a corporate card solution very quickly in order to support both the management of their travel and expenses and to pay invoices for the distillery.”
PREPARING FOR A GLOBAL FUTURE
By July 2015 enough progress had been made on these and other urgent issues for Loria and other senior leaders to sit down with BofAML to map out the future for the company’s treasury operations in Europe, such as connectivity, knowledge-sharing in M&A, and FX through currency exposure to new relationships with suppliers. That whiteboard session marked the start of the transformation of Jose Cuervo’s treasury into a truly global operation, and one that provided the full picture to end the service agreement with Diageo and take over full control of payments and receivables. All of these rapid changes could have been problematic, had it not been for BofAML’s Technical Implementation team consultants based in Mexico and the U.K., who were on hand to ensure a smooth changeover as yet more processes were transformed via host to host connectivity.
One last hurdle remained, and an unusual one. The Bushmills Distillery is itself one of Northern Ireland’s largest tourist attractions, generating over $2 million per year in ticket sales. To handle that cash, BofAML helped create a multi-bank setup with Danske Bank, which has a presence in the town of Bushmills and can handle those takings, with the cash fully visible from BofAML’s reporting systems.
A year after the acquisition, Bushmills and its whiskey is well on the way to full integration with its new parent and, perhaps more significantly, Jose Cuervo now has a global treasury operation that matches its new international footprint.
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- Jose Cuervo needed to integrate two businesses over 5,000 miles apart, in Mexico and Northern Ireland
- Working with BofAML enabled the company to enhance payroll, corporate cards and account visibility
- A team-based approach helped the change go smoothly, giving the company time to plan its future operations in Europe