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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Diageo    DGE   GB0002374006

DIAGEO

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Diageo : Beverage giant Diageo to market Cuban rum

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08/12/2019 | 01:37pm EDT
David Cutter, President of Global Supply and Procurement of British beverage giant Diageo, and Juan Gonzalez Escalona, President of the state-run Cuba Ron, shake hands after signing a joint venture to market Santiago de Cuba rum, in Havana

HAVANA (Reuters) - A European subsidiary of British beverage giant Diageo Plc signed a joint venture deal with state-run Cuba Ron SA on Monday to market Santiago de Cuba Rum, in defiance of U.S. efforts to dissuade investment in the Communist-run country.

The new 50-50 venture, Ron Santiago SA, will have exclusive international rights to the premium brand, considered the best by local residents along with Havana Club, which is marketed by French firm Pernod Ricard under a similar arrangement signed in the 1990s.

The agreement comes at a time when the United States is ramping up sanctions on Cuba and trying to thwart foreign investment there.

The Trump administration in May allowed Title III of the 1996 Helms Burton Act to take effect, enabling U.S. citizens to bring lawsuits against foreign companies profiting from property taken from them after Cuba’s 1959 revolution. It had been suspended by President Donald Trump’s predecessors.

The Santiago distillery and related properties were reportedly nationalized.

Cuban rum is banned in the United States, but popular throughout Europe and other parts of the world.

"Cuban rum represents 9 percent of retail sales of premium rum worldwide," a news release from the new company said.

Regarding the implementation of the long-dormant section of the Helms-Burton Act, Luca Cesarano, general director of the new joint venture, said he was confident the company would not be affected.

Cesarano said a subsidiary of Diageo with no ties to the United States was the partner and no company personnel who work with or in the United States were involved in the project or would be in the future.

"Neither the subsidiary of Diageo which is the partner, nor the venture, will interact with any Diageo entity or person that interacts with the United States," he said at a Havana news conference.

(Reporting by Marc Frank; editing by Jonathan Oatis)

By Marc Frank

Stocks mentioned in the article
ChangeLast1st jan.
DIAGEO 1.10% 3453 Delayed Quote.23.51%
PERNOD RICARD 1.43% 159.1 Real-time Quote.11.03%
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Financials (GBP)
Sales 2020 13 844 M
EBIT 2020 4 474 M
Net income 2020 3 334 M
Debt 2020 11 458 M
Yield 2020 2,12%
P/E ratio 2020 24,4x
P/E ratio 2021 22,6x
EV / Sales2020 6,73x
EV / Sales2021 6,43x
Capitalization 81 673 M
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 3 423,88  GBp
Last Close Price 3 452,00  GBp
Spread / Highest target 20,5%
Spread / Average Target -0,81%
Spread / Lowest Target -18,9%
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Managers
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Ivan M. Menezes Chief Executive Officer & Executive Director
Javier Ferrán Chairman
Kathryn A. Mikells Chief Financial Officer & Executive Director
Evan Mervyn Davies Senior Independent Non-Executive Director
Kwon Ping Ho Independent Non-Executive Director
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