17th Aug 2020 13:56
(Alliance News) - Gordon's gin maker Diageo PLC on Monday said it has reached an agreement to buy the Aviation American gin brand for up to USD610 million, as part of the distiller's plan to expand into "super-premium" gin segment in the US.
Diageo, which also makes Johnny Walker whisky and Guinness, has agreed to buy Aviation Gin LLC and New York-based wine and spirits distributor Davos Brands LLC, which has a majority ownership in the Aviation American gin brand.
Hollywood actor Ryan Reynolds will retain an ongoing ownership interest in Aviation American gin brand, Diageo said. Deadpool star Reynolds acquired a stake in the brand from Davos Brands in February 2018.
As part of the agreement, London-based Diageo is also buying other brands in the Davos Brands' portfolio consisting of Astral tequila, Sombra mezcal and TYKU sake.
The total consideration of USD610 million includes an initial payment of USD335 million and a further potential consideration of up to USD275 million based on the performance of Aviation American gin over a 10-year period.
Diageo said the deal consideration "reflects the brand's current growth trajectory and expected upside potential".
Diageo Chief Executive Ivan Menezes said: "We are delighted to announce this transaction, which supports our participation in the super-premium gin segment in the US. The acquisition of Aviation American gin and the Davos Brands portfolio is in line with our strategy to acquire high growth brands with attractive margins that support premiumisation."
Aviation American gin is the second-largest and one of the fastest-growing brands within the super-premium gin segment in the US, according to Diageo. In 2019, it grew volumes at over 100%, adding the highest number of cases and contributing 40% of super-premium gin segment growth.
The acquisition will be funded by Diageo through existing cash and is expected to close before the end of 2020.
Shares in Diageo were up 0.7% at 2,622.00 pence each in London on Monday afternoon.
By Tapan Panchal; [email protected]
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