Diageo is selling 19 brands - including three varieties of Seagram's whiskey and Romana Sambuca - to Sazerac for $550 million.
The net proceeds of approximately £340 million, after tax and transaction costs, will be returned to shareholders through a share repurchase following completion. The transaction, which is subject to regulatory approval, is expected to complete early in 2019.
The brands included in the transaction 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.
Sazerac - the owner of owner of Buffalo Trace bourbon - is one of the US's oldest family-owned distillers, with operations in 10 states, as well as international activities in the UK, Ireland, France, India, Australia and Canada.
The company purchased Australian premium spirit specialist SouthTrade International from Pinnacle Drinks in 2016.
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.”
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.”
Diageo has also agreed to enter into long-term supply contracts with Sazerac on completion for five of the brands each for a period of 10 years. Supply of all other brands will transition to Sazerac within a one year period from completion.
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