UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
21 June
2017
Commission File Number: 001-10691
DIAGEO plc
(Translation
of registrant’s name into English)
Lakeside Drive, Park Royal, London NW10 7HQ
(Address
of principal executive offices)
Indicate
by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form
20-F X
Form
40-F
Indicate
by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule
101(b)(1):
Indicate
by check mark whether the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule
101(b)(7):
21 June 2017
Diageo to acquire super-premium tequila Casamigos
Diageo has entered into a definitive agreement to acquire
Casamigos, the fastest growing super-premium tequila brand in the
US. This is an exciting opportunity for Diageo to strengthen
its participation in the fast growing tequila category, as well as
expand the brand internationally. The transaction values Casamigos
at up to $1 billion, with initial consideration set at $700 million
and a further potential $300 million based on a performance linked
earn-out over 10 years, reflecting the brand's exceptional growth
trajectory and upside potential.
Casamigos was created in 2013 by founders Rande Gerber, George
Clooney and Mike Meldman. The essence of the brand, "made by
friends for friends", is reflected in the name, Casamigos or 'house
of friends'. Since inception Casamigos has received numerous awards
and accolades from tequila experts, taste makers and influencers
across the US. Casamigos has an authentic brand identity with
a smooth and accessible taste profile. The brand's quality and
uniqueness has delivered impressive growth, reaching 120k cases in
2016, primarily in the US, and a CAGR of 54% in the last two years.
The brand is on track to reach over 170k cases by the end of
2017.
To date, the founders have built a brand that has thrived under
their organic approach in reaching and expanding their "house of
friends", and they will continue to promote the brand and provide
their leadership and vision. We are delighted that the founders
will have continued involvement and active participation in the
future success of Casamigos. This, combined with the
strengths of Diageo, will ensure the continued momentum of the
brand in the US as well as realising the growth opportunity from
international expansion.
The transaction is expected to close in the second half of calendar
2017, subject to regulatory clearances. Diageo expects the
transaction will be EPS neutral for the first three years and
accretive thereafter. We expect the acquisition will be economic
profit positive in the fourth full fiscal year
post-completion.
The acquisition will be funded through existing cash resources and
debt.
Commenting today Ivan Menezes, Chief Executive of Diageo,
said "We are delighted to
announce this transaction today to extend our participation in the
tequila category. It supports our strategy to focus on the high
growth super-premium and above segments of the category. With the
global strength of Diageo we expect to expand the reach of
Casamigos to markets beyond the US to capitalise on the significant
international potential of the brand. We look forward to building
on the remarkable success of Casamigos to
date."
Deirdre Mahlan, President Diageo North America, commented
"I am excited by the opportunity to
bring Casamigos into the Diageo portfolio which allows us to
further penetrate this exciting and high growth category. We
believe Casamigos will play a complementary role alongside Tequila
Don Julio. We look forward to partnering with Rande, George and
Mike to realise the full potential of the
brand."
"We are extremely excited to team up with one of the largest, most
respected spirits companies in the world," said Casamigos Tequila
Co-founder, Rande Gerber.
"What started from a friendship and an idea to create the best
tasting, smoothest tequila as our own house tequila to drink and
share with friends, has quickly turned into the fastest growing
super-premium tequila. Casamigos has always been brought to you by
those who drink it and we look forward to continuing that, working
alongside the expertise and global reach of Diageo. Now even more
people will be able to enjoy and experience our love and passion
for Casamigos."
ENDS
Enquiries:
Media relations:
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Global
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Kirsty King
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+44 (0)7855 808 959
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Dominic Redfearn
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+44 (0)7971 977 759
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+44 (0)20 8978 2749
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US
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Zsoka McDonald
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+12032294730
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Investor relations:
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Pier Falcione
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+44 (0)7786 031 939
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Andy Ryan
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+44 (0)7803 854 842
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About Diageo
Diageo is a global leader in beverage alcohol with an outstanding
collection of brands including Johnnie Walker, Crown Royal, JeB,
Buchanan's and Windsor whiskies, Smirnoff, Cîroc and Ketel
One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and
Guinness.
Diageo is a global company, and our products are sold in more than
180 countries around the world. The company is listed on both the
London Stock Exchange (DGE) and the New York Stock Exchange (DEO).
For more information about Diageo, our people, our brands, and
performance, visit us at www.diageo.com.
Visit Diageo's global responsible drinking resource,
www.DRINKiQ.com,
for information, initiatives, and ways to share best
practice.
Celebrating life, every day, everywhere.
Cautionary statement concerning forward-looking
statements
This document contains 'forward-looking' statements. These
statements can be identified by the fact that they do not relate
only to historical or current facts. In particular, forward-looking
statements include all statements that express forecasts,
expectations, plans, outlook, objectives and projections with
respect to future matters, including trends in results of
operations, margins, growthrates, overall market trends, the impact
of changes in interest or exchange rates, the availability or cost
of financing to Diageo, anticipated cost savings or synergies,
expected investments, the completion of Diageo's strategic
transactions and restructuring programmes, anticipated tax rates,
changes in the international tax environment, expected cash
payments, outcomes of litigation, anticipated deficit reductions in
relation to pension schemes and general economic conditions. By
their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward-looking
statements, including factors that are outside Diageo's
control.
These
factors include, but are not limited to:
● economic, political, social or other developments
in countries and markets in which Diageo operates, which may
contribute to reduced demand for Diageo's products, reduced
consumer spending, negative impacts on Diageo's customer, supplier
and financial counterparties or the imposition of import,
investment or currency restrictions;
● the results of the decision in the United
Kingdom's referendum on 23 June 2016 to leave the European Union
and its stated intention to exit the single market, which may lead
to a sustained period of economic and political uncertainty and
complexity until the detailed terms ofthe United Kingdom's exit
from the European Union and any successor trading arrangements with
other countries are finalised, which may negatively impact economic
conditions in Europe more generally and could have an adverse
impact on Diageo's business operations and financial
performance;
changes
in consumer preferences and tastes, including as a result of
changes in demographic and social trends, public health regulations
and travel, vacation or leisure activity patterns, or as a result
of contamination, counterfeiting or other circumstances which could
harm the integrity or sales of Diageo's brands;
● any litigation or other similar proceedings
(including with tax, customs and other regulatory authorities),
including that directed at the drinks and spirits industry
generally or at Diageo in particular, or the impact of a product
recall or product liability claim on Diageo's profitability or
reputation;
● the effects of climate change and related
regulations and other measures to address climate change, including
any resulting impact on the cost and supply of
water;
● changes in the cost of production, including as a
result of increases in the cost of commodities, labour and/or
energy or as a result of inflation;
● legal and regulatory developments, including
changes in regulations regarding production, product liability,
distribution, importation, labelling, packaging, consumption,
advertising and data privacy; changes in tax law (including tax
treaties), rates or requirements (including with respect to the
impact of excise tax increases) or accounting standards; and
changes in environmental laws, health regulations and the laws
governing labour and pensions;
● changes to the international tax environment such
as the OECD Base Erosion and Profit Shifting Initiative and EU
anti-tax abuse measures resulting in uncertainty around the
application of existing and new tax laws, leading to unexpected tax
exposures;
● the consequences of any failure by Diageo to
comply with anti-corruption and other laws and regulations or any
failure of Diageo's related internal policies and procedures to
comply with applicable law;
● ability to maintain Diageo's brand image and
corporate reputation or to adapt to a changing media environment,
and exposure to adverse publicity, whether or not justified, and
any resulting impacts on Diageo's reputation and the likelihood
that consumers choose products offered by Diageo's
competitors;
● increased competitive product and pricing
pressures, including as a result of actions by increasingly
consolidated competitors, that could negatively impact Diageo's
market share, distribution network, costs or
pricing;
● the effects of Diageo's business strategies,
including in relation to expansion in emerging markets and growth
of participation in international premium spirits markets, the
effects of business combinations, partnerships, acquisitions or
disposals, existing or future, and the ability to realise expected
synergies and/or costs savings;
● Diageo's ability to benefit from its strategy,
including its ability to expand into new markets, to complete and
benefit from existing or future business combinations or other
transactions, to implement cost saving and productivity initiatives
or to forecast inventory levels successfully;
● contamination, counterfeiting or other events that
could adversely affect the perception of Diageo's
brands;
increased
costs or shortages of talent;
● disruption to production facilities or business
service centres or information systems (including cyber-attack),
existing or future;
● fluctuations in exchange rates and interest rates,
which may impact the value of transactions and assets denominated
in other currencies, increase the cost of financing or otherwise
affect Diageo's financial results;
● movements in the value of the assets and
liabilities related to Diageo's pension funds;
● renewal of supply, distribution, manufacturing or
licence agreements (or related rights) and licences on favourable
terms or at all when they expire; and
● failure of Diageo to protect its intellectual
property rights.
All oral and written forward-looking statements made on or after
the date of this document and attributable to Diageo are expressly
qualified in their entirety by the above factors and by the 'Risk
factors' section in our annual report for the financial year ended
30 June 2016. Any forward-looking statements made by or on behalf
of Diageo speak only as of the date they are made. Diageo does not
undertake to update forward-looking statements to reflect any
changes in Diageo's expectations with regard thereto or any changes
in events, conditions or circumstances on which any such statement
is based. The reader should, however, consult any additional
disclosures that Diageo may make in any documents which it
publishes and/or files with the US Securities and Exchange
Commission (SEC). All readers, wherever located, should take note
of these disclosures.
This document includes names of Diageo's products, which constitute
trademarks or trade names which Diageo owns, or which others own
and license to Diageo for use. All rights reserved. © Diageo
plc 2017.
The information in this document does not constitute an offer to
sell or an invitation to buy shares in Diageo plc or an invitation
or inducement to engage in any other investment
activities.
This document may include information about Diageo's target debt
rating. A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal at any
time by the assigning rating organisation. Each rating should be
evaluated independently of any other rating.
Past performance cannot be relied upon as a guide to future
performance.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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Diageo
plc
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(Registrant)
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Date: 21
June 2017
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By:
/s/John Nicholls
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Name:
John Nicholls
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Title:
Deputy Company Secretary
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