Diageo (LON:DGE) has agreed to sell its major wine interests to Treasury Wine Estates for $552 million in cash. The disposal, announced in a statement this morning, will see the US-based Chateau and Estate Wines and the UK-based Percy Fox businesses transfered to the Australian winemaker.
Diageo said that the sale would reap net proceeds of roughly £320 million, with the FTSE 100-listed company to use the money to pay off debt. The deal, which is subject to regulatory approval, is expected to close around the end of the year.
On completion of the transaction, Diageo will have released £1 billion through selling non-core assets since the start of the financial year, CEO Ivan Menezes noted. “Diageo’s strategy is to drive stronger, sustained performance through focus on our core portfolio and today’s announcement is another element of that strategy in action. Wine is no longer core to Diageo and this sale gives us greater focus,” he said.
Earlier in the month, Diageo divested its 57.9 percent stake in Jamaican Red Stripe brewer Desnoes & Geddes and Guinness Anchor Berhad to Heineken for around £515 million.
The latest sale has failed to impress investors, with Diageo’s share price sliding in morning trade today. By 09:49 BST, the stock had fallen 1.11 percent to 1,823.00p. The drinks giant was underperforming the FTSE benchmark index, which meanwhile stood 0.88 percent lower at 6,287.73 points.
As of 10:12 BST, Wednesday, 14 October, Diageo plc share price is 1,823.00p.