Diageo toasts £1.3bn Turkish deal
Guinness maker Diageo today announced a £1.3bn (€1.5bn) deal to snap up Turkish spirits maker Mey Icki as it expands in emerging markets to offset declining European sales.
Mey Icki is Turkey's biggest spirits producer with sales of about €355m a year and is the market leader in raki, the anise-flavoured national drink.
Drinks giant Diageo, which also makes Smirnoff vodka and Baileys, has agreed to buy the company for 3.3 billion Turkish Lira (€1.5bn) from private equity firms TPG Capital and Actera in a deal expected to complete in the second half of 2011.
The acquisition will give Diageo increased exposure to the rapidly growing Turkish spirits market and will allow it to increase sales of its existing brands, such as Johnnie Walker whisky, through its distribution network.
Turkey's consumer spending is forecast to grow at double the rate of economic growth as the swelling ranks of its middle class aspire to drink quality spirits, said Diageo.
Diageo's sales in Europe slumped 3pc in the six months to December 31, but this was more than offset by strong growth in emerging markets and north America as pre-tax profits rose 16pc to £1.61bn.
Paul Walsh, chief executive of Diageo, said: "The acquisition of Mey Icki transforms our existing position in this fast growing spirits market.
"It gives us leading brands in the major local spirits categories, a superior distribution network and a proven management team.
"This investment represents the continuation of our strategy to increase Diageo's presence in those emerging markets, such as China and Vietnam, which have a rapidly growing middle class," he added.