Diageo sells US, UK wine interests for €507m
Irish-listed drinks group Diageo has completed the sale of its major wine interests in the US and the UK to one of the world’s biggest publicly-listed winemakers, Australian vintner Treasury Wine Estates for €507m.
The Guinness-maker, which is based in the UK, announced in October that it had agreed to sell US-based Chateau and Estate Wines and the UK-based Percy Fox businesses for $552m (€507m).
Chief executive of Diageo Ivan Menezes said: “Diageo’s strategy is to drive stronger, sustained performance through focus on our core portfolio…Wine is no longer core to Diageo and this sale gives us greater focus.
“With the completion of this transaction Diageo will have released £1bn from the sale of non-core assets since the start of the financial year.”
Diageo plans to use net proceeds of about $489m after tax and transaction costs to repay borrowings.
For Diageo the sale is part of a broad shakeup under chief executive Ivan Menezes, who said in October that the firm was selling stakes in two beer brewers to Heineken for $780.5m while buying a 20pc stake in Guinness Ghana Breweries from Heineken.
At the time of the initial announcement Treasury said the purchase of brands including Sterling Vineyards, Yellow Tail, Blossom Hill and Piat d’Or as well as the Chateaux & Estate Wine business in the US would immediately double its luxury net sales revenue in that country.
Diageo is a global leader in beverage alcohol with iconic brands in spirits, beer and wine. Diageo’s brands include: Smirnoff, Johnnie Walker, Baileys and Guinness. The company employs over 4,000 people across more than 55 sites in Scotland, England, Ireland, Italy and the Netherlands.
Treasury Wine Estates is an Australian-based global winemaking and distribution business. With 11,000 hectares of vineyards, sales of 30 million cases of wine annually, and revenues of about AU$1.7 billion, TWE employs more than 3,000 winemakers, viticulturists, sales, distribution and support staff across 16 countries, with the Company’s brands sold in more than 70 countries around the world.
