Diageo plans bid to capture Chinese market
02 March 2010 09:17
Drinks giant Diageo has tabled a £610 million bid for Chinese white spirit company Sichuan Chengdu Quanxing Group Company Ltd.
The group, which owns the Guinness, Smirnoff brands said that the full offer for the company would give it a springboard into one of the fastest-growing spirit markets in the world.
Quanxing is a holding company controlling a 39.7% stake in Sichuan Shui Jing Fang Co., Ltd, a leading super premium Chinese white spirits company listed on the Shanghai Stock Exchange.
Locally-made white spirits make up 50% of the Chinese alcohol market, according to the telegraph, with sales of £13 billion last year.
Paul Walsh, chief executive of Diageo, said: "This transaction provides Diageo with the platform to participate at scale and grow share in the largest, most profitable and fastest growing spirits segment in China, super premium Chinese white spirits.
"This is an important and unusual transaction, providing as it does for the increased involvement of a global company in a category with unique heritage. It is Diageo's intention to maintain ShuiJingFang's public listing on the Shanghai Stock Exchange although this is subject to the outcome of the MTO, and to continue to work with our Chinese partners, the existing ShuiJingFang management and Yingsheng shareholders.
"Over the last three years we have built an excellent relationship with our partners in the Quanxing Group and ShuiJingFang, both through our support to the development of their business in China and with the launch of Shanghai White in Hong Kong.
"The transaction we have announced today will enhance this. Diageo now has a valuable opportunity to build a substantial presence in super premium Chinese white spirits and it will enable us to bring one of the leading Chinese white spirits brands to international markets".
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