Diageo sells $550m worth of brands to Sazerac

Diageo is selling a chunk of its spirits portfolio to rival producer Sazerac for US$550 million, offloading its Seagram’s Canadian whisky label, Goldschlager and Booth’s Gin among others.

Seagram’s VO Canadian whisky is among the brands that have been sold to Sazerac…
…along with the gold-flecked schnapps liqueur Goldschlager.

The brands included in the sale are 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.

“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders,” said Ivan Menezes, chief executive of Diageo, confirming the sale this morning.

“This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time. 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.”

After tax and costs, net proceeds of the sale are expected to fetch £340 million, which will be returned to shareholders through a share repurchase following completion, which will be incremental to the previously announced programme of up to £2bn.

The sale is expected to generate an exceptional gain on disposal of approximately £110m.

Diageo has 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 has not confirmed which brands that will include. Supply of all other brands will transition to Sazerac within a one year period from completion.

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

For further analysis on Diageo’s sale of these brand’s, click here.