The Seagram's deal will help Diageo push new brands like George Clooney's Casamigos tequila alongside its core whiskey and vodka lines in the US
Paris/London: Diageo Plc agreed to sell Seagram’s VO whiskey and 18 other brands to closely held US distiller Sazerac Co. for $550 million as the maker of Johnnie Walker focuses on higher-end labels. The world’s largest distiller said the deal will help it develop faster-growing premium drinks in its US portfolio, where it’s pushing new brands like George Clooney’s Casamigos tequila alongside its core whiskey and vodka lines.
Sazerac, the closely held Metairie, Louisiana-based owner of Buffalo Trace bourbon, has been fleshing out its portfolio by adding brands such as Southern Comfort.
Diageo chief financial officer Kathy Mikells called the sale “just another example of what we’re doing to drive efficient growth as we focus on the premium and above segment." The marketing investment backing the portfolio of value brands was limited, she said in an interview, but the sum will be redeployed across more profitable liquors.
Diageo shares rose as much as 0.8% in London trading Monday.
The proceeds from the sale, about £340 million ($438 million) after tax and transaction costs, will be returned to Diageo investors through a share repurchase, the London-based company said in a statement Monday. The transaction, which is subject to regulatory approval, is expected to complete early next year.
The sale is expected to generate an exceptional gain of about £110 million. The deal will dilute earnings per share before exceptional items by about 1.9 pence in the first full financial year, Diageo said.
Other brands included in the sale include Myers’s rum, Romana Sambuca, Popov vodka, Yukon Jack whiskey and Goldschlager schnapps. Many mass-market drinks labels have come under pressure as drinkers in developed countries consume less alcohol but increasingly choose pricier brands.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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