Diageo to sell 19 lower-end spirits brands to Sazerac for $550 mn

Diageo PLC, the world's largest spirits company, is selling a portfolio of 19 lower-end spirits brands, including Seagram's VO whiskey and cinnamon schnapps Goldschlager, to US-based Sazerac for $550 million.

The move comes as part of the company's strategy to trim its portfolio and focus on its premium labels like Johnnie Walker in the United States.

Diageo, which also owns Smirnoff vodka and Guinness stout, has said that it will return the net proceeds of about 340 million pounds to shareholders through a share repurchase.

The sale will reduce Diageo's pre-exceptional earnings per share by 1.9 pence per share in the first full financial year after closing. Among the brands which Diageo is selling 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.

Ivan Menezes, Chief Executive of Diageo, said, "The disposal of these brands enables us to have even greater focus on the faster-growing premium and above brands in the U.S. spirits portfolio."

Kathryn Mikells, CFO, Diageo, stated, "The value space has been in secular decline for a number of years, so we see the bigger growth opportunity and focus for our business in premium and above."