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Diageo sells 19 brands to Sazerac

Published:  12 November, 2018

Diageo has agreed to sell 19 brands to Sazerac, the US distiller, for $550 million.

The deal will see Sazerac - one of America’s oldest family owned privately held distillers, purchase Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschlager, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s and John Begg.

The net proceeds of the deal would mean that approximately £340 million, after tax and transaction costs, would be returned to shareholders through a share repurchase following completion, said Diageo.

Diageo said it had also agreed to enter into long-term supply contracts with Sazerac on completion for five of the brands each for a period of ten years, but declined to divulge the five products.

Supply of all other brands will transition to Sazerac within a one-year period from completion.

“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders. This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time,” said Ivan Menezes, chief executive of Diageo.

“Today’s announcement is another example of this strategy in action. The disposal of these brands enables us to have even greater focus on the faster growing premium and above brands in the US spirits portfolio.”

The transaction, which is subject to regulatory approval, is expected to complete early in 2019.

Sazerac has operations in the US in Louisiana, Kentucky, Indiana, Virginia, Tennessee, Maine, New Hampshire, South Carolina, Maryland, California, and global operations in the UK, Ireland, France, India, Australia and Canada.