3rd Nov 2014 07:23
LONDON (Alliance News) - Diageo PLC Monday said it has agreed a deal to buy Don Julio tequila while selling Bushmills Irish whiskey, strengthening its presence in Mexico.
Diageo is buying the tequila brand from Casa Cuervo, which will also end the production and distribution of Smirnoff vodka in Mexico. In return, Jose Cuervo Overseas is buying Bushmills. The transaction will yield USD408 million to Diageo when completed, expected in early 2015 subject to approval.
The transaction is expected to break even after three years and Diageo said the proceeds will be used to reduce the company's debt. It expects a dilution in earnings per share of 0.6% in the year to end-June 2015.
Smirnoff volume and net sales in Mexico in the year to June 30, 2014 were 285,000 cases and GBP9 million respectively, Diageo said. Bushmills volume and net sales in the same period were 800,000 cases and GBP57 million. Tequila Don Julio had volume and net sales of 590,000 cases and GBP105 million, of which Diageo accounted for 345,000 cases and GBP75 million net sales.
Diageo declined to give further details of the deal.
By Ian Edmondson
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