Diageo share price leaps on takeover speculation

on Jun 8, 2015
Updated: Oct 21, 2019

Diageo’s (LON:DGE) share price leaped as much as eight percent this morning, reaching an 18-month high, after a media report suggested that Brazilian billionaire Jorge Paulo Lemann was weighing up a takeover bid for the FTSE 100-listed drinks company.

Lemann and his partners at private equity firm 3G Capital, where he is chief investor and strategist, are examining an offer for the Guinness and Johnnie Walker maker, according to Brazilian magazine Veja. Neither Diageo nor Lemann have commented on Friday’s report by prominent columnist Lauro Jardim.
Lemann has embarked on a shopping spree in recent years that included buying Burger King from Diageo in 2010 and buying H.J. Heinz Co in 2013 in partnership with US billionaire Warren Buffett. The Brazilian tycoon and his partners also have profited from consolidation in the alcoholic beverage industry. They combined Latin American brewers, then engineered an $11 billion merger with Belgium’s Interbrew NV in 2004. In 2008, they led the $52 billion union with Anheuser-Busch Cos. to form the world’s largest beer manufacturer, Anheuser-Busch InBev NV.
“Diageo bid speculation from 3G Capital looks like it may have legs,” Mark Ward, head of execution trading at Sanlam Securities, said as quoted by Reuters today. “Diageo (is) a solid company, and with the shares below £20, they are certainly attractive to a potential suitor,” he added.
Underpinned by the news, Diageo’s share price opened today’s trading session 8.7 percent higher at 1,914p. That valued the distiller at about £48 billion and marked the stock’s steepest one-day gain since November 2008.
As of 10:35 BST, Monday, 08 June, Diageo plc share price is 1,876.50p.