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Diageo sells Seagram's VO to Sazerac in US$550 million deal

[PARIS]  Diageo Plc agreed to sell Seagram's VO whiskey and 18 other brands to closely held US distiller Sazerac Co. for US$550 million as the maker of Johnnie Walker focuses on higher-end labels.

The world's largest distiller said the deal will help it develop faster-growing premium drinks in its US portfolio, where it's pushing new brands like George Clooney's Casamigos tequila alongside its core whiskey and vodka lines. Sazerac, the closely held Metairie, Louisiana-based owner of Buffalo Trace bourbon, has been fleshing out its portfolio by adding brands such as Southern Comfort.

Diageo shares rose as much as 0.8 per cent early Monday in London.

The proceeds from the sale, about 340 million pounds (S$604.8 million) after tax and transaction costs, will be returned to Diageo investors through a share repurchase, the London-based company said in a statement Monday. The transaction, which is subject to regulatory approval, is expected to complete early next year.

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The sale is expected to generate an exceptional gain on disposal of about 110 million pounds. The deal will dilute earnings per share before exceptional items by about 1.9 pence in the first full financial year, Diageo said.

Other brands included in the sale include Myers's rum, Romana Sambuca, Popov vodka, Yukon Jack whiskey and Goldschlager schnapps. Many mass-market drinks labels have come under pressure as drinkers in developed countries consume less alcohol but increasingly choose pricier brands.

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