Diageo Gains Chinese Approval for Its Shuijingfang Tender
Diageo Plc (DGE), the world’s largest
liquor company, said it gained regulatory approval to buy the
outstanding shares in Sichuan Shuijingfang Co. Ltd. as part of
its acquisition of one of China’s biggest white-spirits makers.
The China Securities Regulatory Commission cleared Diageo’s
mandatory tender offer for 60.3 percent of Shanghai-listed
Shuijingfang, the distiller said today in a statement. The offer
was necessitated by Diageo taking majority control last year of
a company that owns a 39.7 percent stake in Shuijingfang.
The maximum amount payable if the offer is accepted by all
shareholders will be about 6.3 billion yuan ($996 million),
which the London-based company said it will fund through
“diversified financial resources.” The offer price is set at
21.45 yuan a share, the minimum allowed by Chinese takeover
regulations, Diageo said. That’s 17 percent lower than
yesterday’s share price on the Shanghai stock exchange.
Diageo increased its stake in Sichuan Chengdu Quanxing
Group Co. to about 53 percent in June last year as it seeks to
expand its presence in China and distribute and manufacture a
traditional Chinese liquor known as baijiu.
The distiller, which competes with international companies
including Pernod Ricard SA (RI) in China, is seeking to expand into
the country’s local spirits category as booming economic growth
increases alcohol consumption. Imported spirits, including
Diageo’s Smirnoff vodka and Johnnie Walker Scotch whisky,
represent 2 percent of China’s spirits market volume.
Diageo is chasing a greater percentage of sales from
emerging markets compared with the U.S. and Europe, where
government budget cuts and high unemployment are restraining
sales growth. So-called organic sales rose 18 percent in the
first half in Greater China, it said, compared with a 5 percent
increase in North America and unchanged sales in Europe.
Diageo is working with Citic Securities Co., UBS AG and
HSBC Holdings Plc on the tender offer.
To contact the reporter on this story:
Clementine Fletcher in London
cfletcher5@bloomberg.net.
To contact the editor responsible for this story:
Sara Marley at smarley1@bloomberg.net
