Di­a­geo raises a glass to sale of 19 brands in £428m deal

Belfast Telegraph - Business Telegraph - - News - BY HOLLY WIL­LIAMS

DRINKS gi­ant Di­a­geo is of­fload­ing 19 brands in­clud­ing Par­rot Bay rum to US firm Saz­erac in a deal worth $550m (£428m).

Di­a­geo — which counts Smirnoff, John­nie Walker and Guin­ness among its lead­ing brands — said the move will al­low it to con­cen­trate on its pre­mium US spir­its.

The brands be­ing sold in the deal are: Sea­gram’s VO, Sea­gram’s 83, Sea­gram’s Five Star, My­ers’s, Par­rot Bay, Ro­mana Sam­buca, Popov, Yukon Jack, Gold­schlager, Stir­rings, The Club, Scoresby, Black Haus, Peli­groso, Rel­ska, Grind, Piehole, Booth’s and John Begg.

Di­a­geo also said it has en­tered into 10-year sup­ply con­tracts with Saz­erac for five of the drinks be­ing sold.

Pro­ceeds of the deal — ex­pected to be about £340m on a net ba­sis — will be re­turned to in­vestors through a share buy-back.

It is hop­ing to com­plete the sale early next year.

Ivan Menezes, chief ex­ec­u­tive of Di­a­geo, said: “The dis­posal of these brands en­ables us to have even greater fo­cus on the faster grow­ing pre­mium and above brands in the US spir­its port­fo­lio.”

The US ac­counts for around 45% of Di­a­geo’s group prof­its.

Ed­ward Mun­day at Jef­feries In­ter­na­tional said the sale was “fur­ther ev­i­dence of the Di­a­geo change story” and would boost growth in its US spir­its di­vi­sion.

Di­a­geo warned in Septem­ber over “volatil­ity” in some of its mar­kets, with full-year prof­its ex­pected to take a £45m hit due to cur­rency fluc­tu­a­tions. But it said at the time that trad­ing for the year had “started well” and in line with ex­pec­ta­tions.

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