Diageo sells 19 brands to Sazerac for US$550m
Drinks giant Diageo is selling 19 of its non-priority brands to US firm Sazerac in a deal worth US$550 million, as the UK-based group increases its focus on premium spirits.
The deal – which is expected to be completed in early 2019 – will net Diageo £340m (US$436.9m) after tax and transaction costs.
The Smirnoff vodka producer was rumoured to be selling some of its brands in May this year, but declined to confirm or deny the reports.
The offloaded brands include Canadian whiskies Seagram’s VO, Seagram’s 83, and Seagram’s Five Star, Myers’s Rum, Parrot Bay rum liqueur, Romana Sambuca, Popov vodka, Yukon Jack whisky liqueur, Goldschläger cinnamon liqueur, Stirrings cocktail mixer, The Club, Scoresby blended Scotch, Black Haus liqueur, Peligroso Tequila, Relska vodka, Grind espresso spirit, Piehole whiskey liqueur, Booth’s gin and John Begg blended Scotch.
The deal is projected to provide Diageo with an “exceptional gain” of around £110m (US$141.5m).
In addition, the Johnnie Walker maker will enter into long-term supply contracts with Sazerac on completion of the disposal for five of the brands for a period of 10 years.
Sazerac will take over the supply of all other brands within a one-year period from completion.
Ivan Menezes, chief executive of Diageo, said: “Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders.
“This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time.
“Today’s announcement is another example of this strategy in action. 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.”
Jake Wenz, Sazerac’s chief operating officer, added: “We are delighted to acquire these iconic brands from Diageo and are looking forward to working closely with our wholesalers and customers to provide the focus to maximise the full global potential of the brands.”