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    DGE   GB0002374006

DIAGEO PLC

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Diageo : Aviation Gin Bought By Diageo

08/18/2020 | 02:48am EDT

By Jennifer Maloney

Diageo PLC has agreed to pay as much as $610 million to acquire Aviation American Gin, which is partly owned and pitched by actor Ryan Reynolds, and other brands in its latest bet on a celebrity-backed premium liquor.

The world's largest liquor maker said it would make an initial payment of $335 million and a further potential consideration of as much as $275 million based on performance over 10 years. The deal is expected to close by the end of the year.

Diageo is buying Davos Brands LLC, a New York-based distributor and producer of Aviation American Gin and other liquors. Mr. Reynolds, who bought an undisclosed stake in Aviation in 2018, will retain a continuing interest in the brand after the deal, the companies said.

Mr. Reynolds, a Hollywood star best known for his leading role in "Deadpool" superhero films, has appeared in the brand's advertising. The gin is produced at a craft distillery in Portland, Ore.

Aviation's U.S. sales rose from about $20 million in 2018 to about $40 million in 2019, or 1.3% of the U.S. gin market, according to data from Euromonitor.

Jefferies estimates the brand sold about 96,000 cases last year. Analyst Edward Mundy says the brand has been growing rapidly, but Diageo is paying a high multiple of sales.

"Whilst we recognise that Aviation provides a new growth engine for the key U.S. market, we would have preferred to see investment into a category with higher barriers to entry than gin," Mr. Mundy wrote in a research report.

U.K.-based Diaego, maker of Johnnie Walker Scotch, Smirnoff vodka and many other brands, has a long history betting on pairing up with celebrities to push premium drinks.

In 2007, Diageo teamed up with Sean "Diddy" Combs on Ciroc vodka. In 2017, Diageo agreed to pay as much as $700 million to buy upscale tequila brand Casamigos, which was co-founded by actor George Clooney.

"The acquisition of Aviation American Gin and the Davos Brands portfolio is in line with our strategy to acquire high-growth brands with attractive margins that support premiumization," Diageo Chief Executive Ivan Menezes said.

Along with Aviation, Diageo will acquire the other brands in the Davos Brands portfolio, including Astral Tequila, Sombra Mezcal and TYKU Sake.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

 

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Financials
Sales 2021 12 267 M 17 160 M 17 160 M
Net income 2021 2 647 M 3 702 M 3 702 M
Net Debt 2021 13 227 M 18 503 M 18 503 M
P/E ratio 2021 29,1x
Yield 2021 2,16%
Capitalization 76 783 M 107 B 107 B
EV / Sales 2021 7,34x
EV / Sales 2022 6,95x
Nbr of Employees 27 788
Free-Float 91,0%
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Technical analysis trends DIAGEO PLC
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TrendsBullishBullishBullish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 3 309,13 GBX
Last Close Price 3 284,00 GBX
Spread / Highest target 22,0%
Spread / Average Target 0,77%
Spread / Lowest Target -26,9%
EPS Revisions
Managers and Directors
NameTitle
Ivan M. Menezes Chief Executive Officer & Executive Director
Kathryn A. Mikells Chief Financial Officer & Executive Director
Javier Ferrán Larraz Chairman
Alan James Harris Stewart Independent Non-Executive Director
Nicola S. Mendelsohn Independent Non-Executive Director
Sector and Competitors
1st jan.Capitalization (M$)
DIAGEO PLC14.11%105 841
PERNOD RICARD11.07%54 823
BROWN-FORMAN CORPORATION-3.46%35 923
THAI BEVERAGE-3.40%13 369
RÉMY COINTREAU9.00%10 113
FEVERTREE DRINKS PLC0.51%4 113