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Diageo selling more brands
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April 27, 1999: 11:21 a.m. ET
Beverage firm to divest European labels, use proceeds for share buyback
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LONDON (CNNfn) - U.K. food and beverage operator Diageo plans to raise up to 1 billion pounds ($1.6 billion) through the sale of four major European brandy and wine brands.
The world's largest distiller has appointed investment bank Warburg Dillon Read to find potential buyers for three leading brandy brands -- Germany's Asbach, Greece's Metaxa and Italy's Vecchia Romagna -- and the world's number two vermouth, Cinzano.
The move was widely expected by analysts and is part of Diageo's strategy of concentrating on its core international drink brands, including Guinness, Smirnoff, Johnny Walker and Gordon's.
Analysts estimate the London-based company could raise 300 million to 400 million pounds from the sale.
Diageo also is looking for a buyer for its Spanish brewing operation, Cruzcampo. Alex Oldroyd, beverage analyst at Morgan Stanley Dean Witter in London, believes the brewery could fetch another 500 million pounds.
"These proceeds probably will be used for further share buybacks," she added. Diageo already has spent 1.1 billion pounds to buy back 4.5 percent of its outstanding stock this year.
Oldroyd identified French beverage maker Pernod Ricard (PRI) as the most likely bidder for the four European spirit labels.
Diageo also announced the sale of four ouzo brands Tuesday for an undisclosed sum.
These planned disposals follow the sale of 14 North American bourbon and whisky brands in February this year for $365 million.
Diageo, formed by the merger of Grand Metropolitan and Guinness in 1997, also owns the world's number two burger chain, Burger King. 
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Diageo
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