Posts tagged with "US$550 million transaction"

In $550M transaction, Diageo unloads 19 ‘value’ brands to U.S. distiller Sazerac

November 13, 2018

London-based Diageo, the world’s largest distiller, is selling its portfolio of 19 value or “lower-end” brands—including Goldschläger schnapps and Seagram’s Canadian whiskey—to Metairie, Louisiana-based Sazerac for US$550 million in a transaction expected to close early in 2019.

The company has announced that it is pivoting toward premium brands and higher-growth products, The Financial Times reported on November 12.

“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders,” said CEO Ivan Menezes in a formal statement, adding, “This includes a disciplined approach to allocating resources and capital to ensure we maximize retu- growing premium and above brands in the U.S. spirits portfolio.”

Menezes said the brands included in the transaction would include Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschläger, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s, and John Begg.

According to FT, the United States— which accounts for about 45% of group profits—has been a problem spot for Diageo. The financial news daily said, “ the group’s significant exposure to the vodka ‘value’ brands, have caused Diageo’s U.S. sales to grow more slowly than the market. In its financial year 2018 to June, Diageo posted 3% organic sales growth in the US, compared with the 4% cent growth seen for the US spirits market overall.”

This is not the company’s first spirits sale aimed at greater profitability. Since 2015, Diageo has unloaded its wine business, as well as its beer brand Red Stripe.

The company said it would return net proceeds of about US$441 million to investors through share buybacks.

Sazerac is a privately owned company that, as of 2017, operated nine distilleries worldwide and ranked as the second largest spirit producer in the United States.

Research contact: @labboudles