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Diageo Sells Part of its Wine Portfolio

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Diageo Sells Part of its Wine Portfolio

Diageo Sells Part of its Wine Portfolio
October 15
12:07 2015

Diageo has agreed to sell its US-based Chateau and Estate Wines and the UK-based Percy Fox businesses to Treasury Wine Estates for a consideration of $552 million. The net proceeds of approximately £320 million, after tax and transaction costs will be used to repay borrowings. The transaction, which is subject to regulatory approval, is expected to complete around the end of the calendar year.

“Diageo’s strategy is to drive stronger, sustained performance through focus on our core portfolio,” says Ivan Menezes, chief executive of Diageo. “Wine is no longer core to Diageo and this sale gives us greater focus.”

He adds: “With the completion of this transaction Diageo will have released £1 billion from the sale of non-core assets since the start of the financial year. This proactive portfolio approach has focused the business, enhanced our financial strength, improved our returns and strengthened the business, positioning us even more firmly to deliver our performance ambition.”

Following completion of this transaction Diageo’s wine interests are limited to Justerini & Brooks Wine Merchants, the Argentinian wine business of Navarro Correas, the wine brands of Mey Icki and USL, the Chalone brand and assets and the Acacia winery and vineyard.

Michael Clarke, chief executive of Treasury Wine Estates, says: “This acquisition will transform our US business into a larger player of scale in the attractive Luxury and Masstige segments of the high growth US market. The additional supply of Luxury and Masstige wine will be a game-changer for our US brands, providing us with an immediate opportunity to step-change our growth in the US, Canada, Asia and Latin America.”

TWE will also acquire the Blossom Hill wine brand in the UK, the second largest wine brand in the UK by volume and value last year. The acquisition is subject to certain regulatory approvals, including anti-trust approval in the US, and is expected to complete in approximately three months.

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