Diageo completes Mey Içki deal

Diageo today announced that it has received regulatory clearance for the £1.3 billion acquisition of Mey Içki, the leading spirits company in Turkey.

The Turkish Competition Authority clearance is conditional upon the disposal of the Mey Içki brands Hare liqueur and Maestro – deals which Diageo is confident will be completed within the current financial year.

Diageo, which announces its full-year results tomorrow, originally announced its intention to acquire Mey Içki in February this year as it sought to strengthen its position in the fast-growing Turkish spirits market.

Mey Içki is the leading spirits producer and distributor in Turkey.

Its key brand Yeni Raki accounts for around 67% of the group’s total revenues, while it also has a presence in the vodka, wine, gin and liqueur markets.

It is the company’s strength in the Turkish raki market which convinced Diageo to make its move, with the drink being by far the most popular spirit in Turkey, accounting for 80% of total spirits consumption in the country.

Meanwhile vodka accounts for around 11% of Mey Içki’s total sales, with flagship brands such as Istanblue, Binboa and Bazooka.

Andrew Morgan, president for Europe at Diageo said the company was delighted to have bought “the leading player in such an attractive growing market.”

He added: “In the coming months, we look forward to combining our premium international spirits brands with the outstanding local brands that Mey Içki has built over the years.

“We are pleased to note that the business has continued its strong growth trajectory since we agreed terms with TPG in February.

“This investment is an example of Diageo’s strategy to expand in high growth markets, which have a rapidly increasing middle class.”

Elsewhere, Diageo has successfully closed a public offer to acquire an additional 5.07% stake in Hanoi Liquor Joint Stock Company (Halico) in Vietnam for approximately £6.4 million. The public offer opened on 21 July 2011 and closed on 19 August 2011.

Diageo is now processing the clearing procedures to fully complete the transaction.

The UK-based company has committed to purchase Halico shares at VN$213,600 per share from shareholders who participated in the public offer, increasing Diageo’s total stake in Halico to 30%.

Prior to the public offer, Diageo had built a 24.93% equity stake in Halico in two phases; purchasing firstly 18.67% from VinaCapital and then a further 6.26% from other shareholders.

A Diageo statement said: “Diageo’s public offer to increase its equity stake in Halico further demonstrates Diageo’s commitment to working with Halico as its strategic partner in the rapidly growing Vietnamese branded spirits sector.

“As Halico’s strategic partner, Diageo has been assisting and will continue to assist Halico by enhancing their capabilities across a range of functions, including innovation, branding, supply, distribution and corporate relations.

“In return, Diageo will remain a long term equity investor in Halico, Vietnam’s largest domestic branded spirits producer with the number one vodka brand, Vodka Hanoi.”

Gilbert Ghostine, president of Diageo Asia Pacific, added: “Diageo is confident that, by partnering with Halico, we both can successfully leverage Vietnamese consumers’ growing demand for branded spirits such as Vodka Hanoi.”