DGE Diageo Plc

RNS No 6564e
DIAGEO PLC
10 June 1999


DIAGEO AGREES SALE OF CRUZCAMPO

Diageo today announces an agreement by Guinness, its brewing division, to
dispose of its 88 per cent shareholding in Grupo Cruzcampo to Heineken, at a
price which values Cruzcampo at Ptas 145bn (#570m) on a debt free basis.  The
transaction is conditional upon satisfactory regulatory approval from the
European Commission. The proceeds to be received by Diageo for its 88 per cent
shareholding will be adjusted to take account of the level of net debt or cash
at completion and certain other liabilities.  These net proceeds are estimated
to be Ptas 108bn (#426m).  Diageo's share of net assets included in its
consolidated balance sheet at 31 December 1998 was #89m and goodwill written off
amounted to #265m. Diageo expects to realise an exceptional profit after
goodwill of approximately #65m on the disposal.  Proforma trading profits for
the year ended 30 June 1998 were #27m. Commenting on the announcement Colin
Storm, Guinness Chief Executive, said "Following several unsolicited expressions
of interest in the Cruzcampo business, our aim was to evaluate whether we could
generate value for our shareholders through the sale of the business.  The deal
we are announcing today shows that we have created value and the price we have
achieved reflects both the improvements which have been made in the
profitability of the business over the last three years and the company's future
potential. "In actively participating in the consolidation of the Spanish beer
industry, we believe that we have ensured the best possible deal for our
shareholders and for the future of the Cruzcampo business." ends - Spanish beer
market With a production of 24 million hls, the Spanish beer market ranks third
in the European Union, preceded by Germany and the UK.  The country ranks
seventh in the European Union for per capita beer consumption, with 67 litres
per head in 1997, 68 per cent of which is sold on-premise.  With an annual
production of six million hls, Grupo Cruzcampo heads the national beer market
with a share of 24 per cent. Grupo Cruzcampo Guinness purchased Cruzcampo in
1991, followed by Union Cervecera in 1993, to form Grupo Cruzcampo.  The
company, which employs 2,200 people throughout Spain, had a turnover of #292
million for the year ended 30 June 1998. The company owns five breweries - the
largest of which, the Seville brewery, employs 550 people in operations. The
other breweries are in Jaen, Madrid, Valencia and Navarra.  Cruzcampo also
operates 13 owned and nine agency warehouses for storage and national
distribution. Cruzcampo also has a network of 1,200 independent wholesalers of
the company's brands, which include Cruzcampo, Skol, Keler and Alcazar.  The
company also brews Kaliber and Carlsberg under licence.  Guinness Stout,
Kilkenny and Miller Genuine Draft are distributed by Cruzcampo. Diageo plc
Guinness Stout is the flagship beer brand of Diageo plc, the international
branded food and drinks company. Diageo's other key brands include Johnnie
Walker and J&B Scotch whisky, Smirnoff vodka, Gordon's gin and Baileys cream
liqueur, Pillsbury, Haagen-Dazs and Burger King. The group operates in over 200
markets worldwide, and employs around 77,000 people  Diageo plc had a turnover
of #12bn ($19.7bn) in 1998.
                               

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