By Joe Hoppe

Diageo PLC said Tuesday that it has agreed to acquire Don Papa Rum, a dark rum from the Philippines, for a potential total consideration of up to 437.5 million euros ($473.4 million).

The liquor maker--which owns Johnnie Walker whisky and Tanqueray gin--said the upfront consideration is EUR260 million, with a further potential consideration of up to EUR177.5 million through to 2028, subject to performance. The acquisition will be funded through existing cash reserves and is expected to close in the first half of 2023.

The rum is available in 30 countries, with France, Germany and Italy being its largest markets.

Diageo said the "super-premium plus" segment of the rum category that Don Papa Rum resides is in the early stages of premiumization, with a compound annual growth rate of 18% in Europe and 27% in the U.S. between 2016 and 2021. Over that same time, Don Papa Rum outperformed the Europe market, with a compound annual growth rate of 29%.

"This acquisition is in line with our strategy to acquire high growth brands with attractive margins that support premiumization, and enables us to participate in the fast growing super-premium plus segment," said John Kennedy, president of Diageo Europe and India.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

January 17, 2023 02:29 ET (07:29 GMT)

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