Diageo Does Business With Pernod Ricard, Sends UK Stocks Up
Pernod Ricard has put its “Old Bushmills” Distillery Company Limited, which includes “Bushmills” Irish whiskey, up for sale for about $363 million. The buyer is Diageo.
“This is one of the industry’s oldest Irish whiskey brands and gives Diageo, for the first time, an important presence in this growing category,” said the company’s CEO Paul Walsh.
Pernod has also made a $13.42 billion offer for Allied Domecq, and offered Diageo an option to buy Allied Domecq’s Montana wine business if it successfully takes over the company. This contributed to the rise of UK stocks. Bloomberg reports:
Diageo advanced 18.5 pence, or 2.4 percent, to 806, making it the best performer on the FTSE benchmark. The distiller agreed yesterday to buy the Bushmills whiskey brand for 200 million pounds ($364 million). Diageo also promised to drop all discussions with third parties to acquire assets from Allied Domecq Plc, the second-biggest liquor maker.
Separately, Diageo had its shares raised to “neutral” from “underperform” by Ben Maitland, an analyst at WestLB Equity Markets.
Allied Domecq fell 5 pence, or 0.5 percent, to 694, while Pernod Ricard rose 4.56 euros, or 3.7 percent, to a record 128.90 euros.
According to a press release, under the option relating to Montana, Diageo would acquire the majority of Montana’s New Zealand wine business. If exercised, Diageo would acquire all of the Montana business with the exception of the Corbans, Stoneleigh and Church Road wine brands and related assets which would be retained by Pernod Ricard.
The transactions of course require the completion of Pernod Ricard’s proposed acquisition of Allied Domecq. They are also subject to the approval of the relevant regulatory authorities and other normal conditions.
The Bushmills transaction and, if the option is exercised, the Montana transaction are expected to close by the end of 2005 or early 2006. Diageo has agreed not to enter any third party discussions in relation to any potential acquisitions from Allied Domecq, unless Pernod Ricard stops pursuing its acquisition of Allied Domecq.
“I am very pleased with this agreement which is good for the two companies and underpins the confidence which both we and Diageo have in the success of Pernod Ricard’s recommended offer for Allied Domecq,” said Pernod Ricard Chairman and CEO, Patrick Ricard.