Wanna gamble on property market for megarich? Consider Marnier

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Buying one share of Grand Marnier Group will get you 8,050 euros in cash when the company is acquired by Davide Campari Campari-Milano SpA — and a chance to roll the dice on what may be one of the biggest residential real estate deals of all time.
Shares of Grand Marnier resumed trading after the French company agreed to sell itself to Campari, and the stock jumped above the price at which Campari will tender for the shares. That’s because the deal has a kicker — Campari plans to sell a historic villa that Grand Marnier owns on the French Riviera and share the proceeds with Grand Marnier shareholders.
How much might Villa les Cedres be worth? No one knows. As Campari Chief Executive Officer Robert Kunze-Concewitz said in announcing the deal on Tuesday, properties like it change hands only once or twice a decade. The villa, surrounded by a botanical garden, has been in the hands of Grand Marnier’s founding family since the 1920s. It’s in Saint Jean Cap Ferrat, a peninsula to the east of Nice that’s been home to Rothschilds, Russian oligarchs and U.S. tech billionaires.
Alexandra Connolly, who runs a real estate brokerage in the region, said it could fetch 200 million euros ($226 million) to 350 million euros, though she said it’s hard to estimate given the economic situation, which has hampered the buying power of Russian billionaires who have flocked to the region in recent years. A mansion outside Paris fetched a world record price of more than 275 million euros, two people with knowledge of the matter said in December.
Campari plans to keep 80 million euros of the proceeds after taxes and brokerage fees, and divide the rest equally among the holders of Grand Marnier’s 85,000 shares. Stockholders who tender their shares to Campari will receive a document giving them the right to a proportional share of the villa proceeds, according to the takeover agreement filed with France’s market regulator. The right rests with whoever tenders the shares and can’t be traded. The market is starting to place its bets on the property’s value — Grand Marnier shares rose 64 percent to 8,250, or 200 euros above the buyout price.

Highly Illiquid

That premium, multiplied by 85,000 shares, implies a value to Grand Marnier shareholders of 17 million euros. Add in the 80 million euros that Campari plans to keep, and you get a rough value for the villa of 97 million euros after taxes and fees.
Anyone buying the shares at these prices is betting that that’s too low. Still, this isn’t an easy trade to execute. Because the Marnier-Lapostolle family controls the company, known formally as Société des Produits Marnier Lapostolle, the stock is highly illiquid, trading an average of five shares a day in the past year. The clock is ticking, too: Grand Marnier shareholders only share in the villa proceeds if the property is sold by June 30, 2021, according to the takeover offer.

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