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Diageo weighs up possible merger

Published:  14 July, 2010

Analysts believe Diageo could be weighing up an eventual merger deal with SABMiller or AB InBev as it faces up to stagnating spirits markets in its core territories of Europe and North America.

Matrix Corporate Capital met with Diageo executives last week and concluded that the company was open to the idea of a merger in order to broaden its portfolio.

In a report, Matrix said: "As the primary believer in 'total beverage alcohol' Diageo sees real revenue synergies from merging with a major brewer: merging with ABI or SAB would give its spirits business much more rapid growth in Latin America and certain other markets. Meanwhile it could deliver numerous markets in Europe and Africa that both ABI and SAB lack.

"Our impression is that Diageo's door is open to a deal with either company."

Diageo is valued at around £27 billion while SABMiller is worth £30 billion.