Diageo share price little changed as group swaps assets with Heineken

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Oct 7, 2015
Updated: Apr 9, 2020

Diageo (LON:DGE) and Heineken have agreed to exchange emerging-market assets, the FTSE 100 drinks giant has said. The deal will result in a £440 million profit for the London-listed group which will also hike its stake in Guinness Ghana as part of its strategy to grow the Guinness brand in Africa.

Diageo’s share price has been little changed this morning, having shed 0.03 percent to 1,818.50p as of 09:02 BST, slightly underperforming the benchmark FTSE 100 index. The company’s shares have added some four percent over the past year.
The maker of Johnnie Walker whisky and Smirnoff vodka announced in a statement this morning that it had completed an asset swap with Heineken which has seen the UK group sell its 57.87-percent shareholding in Jamaica’s Desnoes & Geddes Limited and its 49.99-percent its stake in Malaysia’s GAPL Pte Limited, in exchange for Heineken’s 20-percent interest in Guinness Ghana Breweries. The FTSE 100 group will also receive a net payment of $780.5 million (£515 million) in cash, which it will use to pay down debt, and record an exceptional profit of around £440 million after tax.

“The transaction we have announced today continues our proactive approach to our portfolio, enhancing our focus on the core to achieve Diageo’s performance ambition,” the London-listed group’s chief executive Ivan Menezes said in the statement, adding that the deal “provides a strong route to consumer for Guinness which will grow the brand in these markets”.
Following the transaction, Diageo will hold 72.42 percent in Guinness Ghana. The deal comes after last month, the blue-chip group said that it was looking to hike its stake in Guinness Nigeria from 54.3 percent up to a maximum of 70 percent. Bloomberg reported at the time that the deal was likely to cost Diageo more than $200 million.
As of 09:21 BST, Wednesday, 07 October, Diageo plc share price is 1,820.75p.

Invest in crypto, stocks, ETFs & more in minutes with our preferred broker, eToro
10/10
67% of retail CFD accounts lose money