TIDMDGE
RNS Number : 1871E
Diageo PLC
28 May 2012
28 MAY 2012
Diageo to acquire YPIOCA, THE leading Premium cachaca BRAND in
brazil
Diageo, the world's leading premium drinks business, has reached
agreement with Ypioca Agroindustrial Limitada to acquire the
leading premium cachaca brand, Ypioca, and certain production
assets.
The consideration is BRL 900 million (approximately GBP300
million) in cash and the transaction is expected to complete in a
month. The acquisition is expected to be EPS neutral in year 1 and
Economic Profit positive in year 5 using a 12% WACC rate. It
expands Diageo's presence in Brazil and enhances access to the
growing number of middle class consumers who are driving the growth
of premium brands.
The acquired Ypioca brand has net sales of BRL 177 million
(approximately GBP60 million) based on the pro forma adjusted
figures as of December 2011.
Cachaca is the largest spirits category in Brazil and Ypioca is
the leader in the growing premium cachaca segment. It is the number
2 by value and the number 3 by volume in the overall cachaca
category. In addition, Ypioca has an extensive sales and
distribution network in the Northeast of Brazil and the second
largest retail penetration nationwide.
Paul Walsh, CEO of Diageo commented:
"Brazil is an attractive, fast growing market for Diageo with
favourable demographics and increasing disposable incomes. The
acquisition of Ypioca gives us the leading premium brand in the
largest local spirits category. It will also provide Diageo with an
enhanced platform from which to accelerate the long term growth of
our premium international spirits brands in Brazil.
"The acquisition meets our return criteria and will be accretive
to Diageo's top line growth.
"This investment represents the continuation of our strategy to
increase Diageo's presence in the fastest growing economies of the
world."
ENDS
Notes to editors:
-- Morgan Stanley acted as financial advisors to Diageo in this transaction.
About Diageo
Diageo is the world's leading premium drinks business with an
outstanding collection of beverage alcohol brands across spirits,
beer and wine. These brands include Johnnie Walker, Crown Royal, J
B, Windsor, Buchanan's and Bushmills whiskies, Smirnoff, Ciroc and
Ketel One vodkas, Baileys, Captain Morgan, Jose Cuervo, Tanqueray
and Guinness.
Diageo is a global company, with its products sold in more than
180 countries around the world. The company is listed on both the
New York Stock Exchange (DEO) and the London Stock Exchange (DGE).
For more information about Diageo, its people, brands, and
performance, visit us at Diageo.com. For our global resource that
promotes responsible drinking through the sharing of best practice
tools, information and initiatives, visit DRINKiQ.com.
Celebrating life, every day, everywhere.
About Ypioca:
Ypioca is a leading premium cachaca brand in Brazil, with more
than 160 years of heritage. Diageo's acquisition of the Ypioca
brand will include a cachaca distillery in Paraipaba/Ceara, a
bottling plant in Fortaleza/Ceara and a warehouse in Guarulhos/Sao
Paulo. Ypioca has an 8% market share of the total cachaca category,
at 6.6million 9L cases.
For further information:
Investor enquiries to: Catherine James +44 (0) 7803 854 550
Agnes Bota +36 1 580 1022
investor.relations@diageo.com
Media enquiries to: Kirsty King +44 (0) 20 8978 6855
Stephen Doherty +44 (0) 20 8978 2528
media.comms@diageo.com
Analyst materials:
Additional materials will be made available to download from
www.Diageo.com.
Forward-looking statements
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forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts. In particular,
forward looking statements include all statements that express
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impact of interest or exchange rates, the availability or cost of
financing to Diageo, anticipated cost savings or synergies, the
completion of Diageo's strategic transactions, whether and when any
transaction may be eps accretive or economic profit positive and
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qualified in their entirety by the 'risk factors' contained in
Diageo's annual report on Form 20-F for the year ended 30 June 2011
filed with the US Securities and Exchange Commission ("SEC"). Any
forward-looking statements made by or on behalf of Diageo speak
only as of the date they are made. Diageo does not undertake to
update forward-looking statements to reflect any changes in
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circumstances on which any such statement is based. The reader
should, however, consult any additional disclosures that Diageo may
make in documents it publishes and/or files with the SEC. All
readers, wherever located, should take note of these disclosures.
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sell or an invitation to buy shares in Diageo plc or an invitation
or inducement to engage in any other investment activities. This
announcement includes information about Diageo's target debt
rating. A security rating is not a recommendation to buy, sell or
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cannot be relied upon as a guide to future performance.
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END
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