6th Jun 2005 16:35
Diageo PLC06 June 2005 06 June 2005 Diageo signs agreement with Pernod to buy Bushmills Diageo has entered into an agreement with Pernod to purchase Bushmills, theworld's second largest Irish whiskey brand, for approximately £200 million. Theacquisition of Bushmills represents an important opportunity for Diageo as Irishwhiskey is a category in which, currently, Diageo does not participate. Diageo expects that the proposed acquisition will be economic profit positive duringthe fourth full year after completion using a 9% weighted average cost ofcapital. In addition Pernod has granted Diageo an exclusive no cost option to purchaseAllied Domecq 's Montana wine business with the exception of the Corbans,Stoneleigh and Church Road wine brands for 11 x 2004 contribution aftermarketing expenditure (CAMP). The purchase price, of approximately £320million, may be adjusted to reflect information relating to the Montana CAMPwhich will be available following completion of the acquisition of Allied Domecq by Pernod. Diageo will exercise the option subject to determining that theacquisition of Montana can achieve appropriate growth and returns forshareholders. The agreements are conditional upon the successful completion of Pernod's agreedbid for Allied Domecq which Pernod and Allied Domecq have both stated theyexpect to occur on 26 July 2005. Both acquisitions would also be subject toregulatory clearance and are expected to close in late 2005 or early in 2006. Under a separate agreement Diageo has undertaken to cease discussions with anythird party in connection with any of the assets or businesses currently ownedby Allied Domecq and not to (and to procure that none of its concert partieswill) acquire or dispose of any shares in Allied Domecq without Pernod'sconsent. This undertaking falls away on completion of the acquisition of AlliedDomecq by Pernod Diageo's financial position remains strong and therefore notwithstanding both ofthese acquisitions Diageo will recommence the share buy back programme fromtomorrow. Paul Walsh, Chief Executive of Diageo commented: 'Since 2000 Diageo has built a focused premium drinks company which is now aworld leader. The business has grown organically and through targetedacquisitions. The acquisition of Bushmills and the option we have to acquireMontana continues that strategy. 'The acquisition of Bushmills is a particularly pleasing opportunity. This isone of the industry's oldest Irish whiskey brands and gives Diageo, for thefirst time, an important presence in this growing category. Montana is one ofthe leading New Zealand wine brands and the number one New Zealand export brand.The option gives us the opportunity to establish whether it could deliver thesame growth that we have seen from our existing wine business.' UBS Investment Bank is acting as financial advisor to Diageo. Slaughter and Mayis acting as legal advisor. ENDS Contacts: Investor Relations: Catherine James +44(0) 207 927 [email protected] Media Enquiries: Isabelle Thomas +44 (0)20 7927 [email protected] Notes to editor: Diageo has been a lead player in the consolidation of the global drinksindustry. In December 1997 Diageo plc was formed through the merger of Guinnessand Grand Met, creating with that merger the world's leading spirits company,United Distillers and Vintners. In 2000 Diageo merged its spirits, wine and beerbusinesses followed in December 2001 by the acquisition of certain keybusinesses of the Seagram Company Ltd. Diageo now owns market leading spirits,wine and beer brands. In 1997 key brands retained from Guinness PLC included: Guinness,Johnnie Walker, Gordon's, Tanqueray and Bell's. While key brands retainedfrom GrandMet included: Smirnoff, J&B, Baileys, Cuervo, BeaulieuVineyard and Blossom Hill. In 2001 we augmented our priority brandportfolio through the acquisition of Captain Morgan, Crown Royal, SterlingVineyards, Cacique, Myers Rum, Bulleit Bourbon, Seagram's 7 and Seagram'sVO. And in 2004 we went on to acquire Ursus vodka and the Chalone WineGroup. Diageo trades in some 180 markets around the world and is listed onboth the New York Stock Exchange (DEO) and the London Stock Exchange(DGE). For more information about Diageo, its people, brands andperformance, visit us at www.diageo.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Diageo