Diageo To Sell Bushmills To Jose Cuervo Overseas - Quick Facts

(RTTNews) - British beverages giant Diageo Plc (DEO, DGE.L) has agreed with Casa Cuervo the acquisition of full global ownership and control of Tequila Don Julio and the early termination of Casa Cuervo's production and distribution deal for Smirnoff in Mexico. In turn, Diageo has agreed to sell Bushmills to Jose Cuervo Overseas. The transaction would result in a net payment of $408 million to Diageo upon closing, which is expected in early 2015 subject to certain approvals. The transaction is likely to be economic profit break-even in year 3 assuming a WACC rate of 9%. Assuming completion of the transaction in early calendar 2015 and the use of the net proceeds to reduce debt at Diageo's average rate of interest, the transaction would dilute earnings per share by 0.6% in the year ending June 30, 2015.

Ivan Menezes, Chief Executive, commented: "This transaction delivers two key objectives for us. We have secured our position in the growing super and ultra-premium segments of the tequila category and further strengthened our global footprint by expanding our leading position in Mexico where the growth of spirits has great potential."