What happened? Pernod Ricard has signed an agreement to sell its Imperial Blue business division to Tilaknagar Industries. Closing of the deal is subject to approval from the Competition Commission of India and is expected to occur within the coming months (in 6 months from signing per Tilaknagar). BNPP Exane View: Pernod Ricard comment on the sale of Imperial Blue enabling the business to fully tap into premiumisation trends and support sustained profitable growth. Upon closing, the transaction is expected to be immediately and meaningfully accretive to Pernod Ricard India''s operating margin and net sales growth rate. Transaction details Tilaknagar have disclosed that consideration to be paid to Pernod Ricard for Imperial Blue is INR41.9bn (EUR413m) of which a small portion (EUR28m) will be deferred until FY30. Imperial Blue has a c.9% volume share of the whisky segment in India and is the #3 whisky brand globally by volume with c.22m 9-litre case sales in LTM to March-2025. The brand had sales of INR30.67bn (EUR302m) in LTM to March-2025. This therefore implies an EV/sales valuation of 1.35x for the business (profits for the business do not to be appear to be disclosed by either Tilaknagar or Pernod Ricard). We note that according to a regulatory filing by Tilaknagar, Imperial Blue achieved sales of INR31.38bn in FY23 (to June); INR30.49bn in FY24 (-2.8%) and is estimated to generate sales of INR32.08bn (+5.2%) in FY25. Implications for Pernod Ricard Sales of EUR316m (FY25e) for the brand equates to c.2.9% of Pernod Ricard group revenue. Imperial Blue has a meaningfully lower EBIT margin than the group average as we therefore guestimate it accounts for c.1% of group EBIT. The transaction is therefore likely to be only modestly earnings dilutive. We estimate the disposal will reduce Pernod Ricard''s ND/EBITDA ratio by c.0.1x. The potential sale of Imperial Blue by Pernod Ricard has been widely reported by the local Indian press. While we were...