Turkish deal offers Diageo emerging market prospects

Diageo has announced a £1.3 billion takeover of Mey Icki, Turkey’s biggest spirits company, in a move designed to give the world’s largest drinks group improved presence in fast-growing emerging markets.

Diageo said the deal to buy Mey Icki from private equity firms TPG Capital and Actera would bring an immediate boost to earnings in the first year.

Mey Icki has a 70% share of the Turkish spirits market and it is the country’s biggest vodka manufacturer with its Binboa and Istanblue brands.

Mey Icki also produces raki, the national drink which accounts for 80% of the spirits consumed in Turkey.

Diageo chief executive Paul Walsh said: We believe this is a great opportunity for Diageo and it furthers our strategy to increase our presence in the emerging markets [such as China and Vietnam].

“Turkey is a high growth market with strong GDP growth and an increasingly affluent middle class."

Turkey is viewed as a prime market for growth due to the fact that consumer spending in the country is set to grow at double the rate of economic output.

Walsh added: “Mey Icki is a high growth, high margin business and it gives Diageo a superior distribution network for the growth of our premium brands."

The acquisition is expected to be completed in the second half of 2011.

Alan Lodge, 23.02.2011