Shares in Diageo (LON:DGE) have climbed higher in London in today’s session, holding steady, as the company announced that it was selling a portfolio of brands to US distiller Sazerac. The news comes after the Smirnoff and Johnny Walker maker recently flagged a currency hit on full-year sales and profits, while reassuring investors that its performance was in line with expectations.
As of 09:37 GMT, Diageo’s share price had added 0.16 percent to 2,751.00p, marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.33 percent higher at 7,128.79 points. The group’s shares have added about seven percent to their value over the past year, as compared with about a 3.7-percent dip in the Footsie.
Diageo offloads brands
Diageo announced in a statement this morning that it had agreed the sale of nineteen brands, including Seagram’s, in an agreement with Sazerac for an aggregate consideration of $550 million. The FTSE 100 group said that the net proceeds of the deal are estimated at about £340 million, after tax and transaction costs, and will be returned to shareholders through a share buyback.
“Diageo has a clear strategy to deliver consistent efficient growth and value creation for our shareholders,” the blue-chip group’s chief executive Ivan Menezes commented in the statement, adding that the disposal would enable the company “to have even greater focus on the faster growing premium and above brands in the US spirits portfolio”.
The deal, which is pending approval by regulators, is expected to complete early next year.
Analysts on FTSE 100 group
Shore Capital reaffirmed Diageo as a ‘buy’ today, without specifying a price target on the shares. According to MarketBeat, the Johnny Walker and Smirnoff owner currently boasts a consensus ‘buy’ rating and an average price target of 2,860p.