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Diageo seeks to raise stake in China's Sichuan Shuijingfang

DBR Staff Writer Published 26 June 2018

UK-based drinks company Diageo has proposed to increase stake in Chinese spirits firm Sichuan Shuijingfang Company (SJF) and take majority control of the company.

Diageo approached the board of directors of SJF with a proposal for a partial tender offer to increase its aggregate equity stake in the Chinese firm, via its wholly-owned subsidiaries, from about 39.71% to up to 60% at an offer price of RMB62 per share ($9.50).

Sichuan Shuijingfang produces and sells alcoholic products. The company mainly provides liquor series products under the brand, Swellfun.

SJF's wine products include Swellfun Diancang, Swellfun Jingtai, Swellfun Zhenniang No. 8, Swellfun Yuanmingqing, Swellfun Jingcui, Swellfun Hongyun, Swellfun Jindian, Swellfun Meilanjuzhu, Xiaoshuijing, Shuijingshangpin and Tianhaochen.

The company distributes its products within both domestic and overseas markets.

SJF commented about the proposal on the website of the Shanghai Stock Exchange, saying that it does not constitute the announcement of an offer and creates no obligation on Diageo and/or any Diageo subsidiary to make an offer.

“Accordingly, shareholders in SJF have been advised that such proposal is still under discussion and there can be no certainty that any offer will be made.  Shareholders have been further advised to be aware of investment risks in SJF shares. Further developments will be communicated to shareholders in due course," SJF said.

Diageo's products are sold in over 180 countries across the world. The company's brands include Johnnie Walker, Crown Royal, JεB, Buchanan’s and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Tanqueray and Guinness.

In March this year, Diageo acquired Belsazar, an aperitif brand from Black Forest. Belsazar was launched by entrepreneurs Maximillian Wagner and Sebastian Brack in 2013.

Belsazar was acquired from Distill Ventures, a UK-based investment company that provides funding for spirit entrepreneurs. Belsazar joined Distill Ventures in 2014. It is claimed to have performed well in the markets of the UK and Germany.

In Germany, it is available in over 750 on-trade outlets as of summer 2017. These include gastronomy bars, Michelin starred restaurants, biergardens and smaller restaurants where people are looking for light, long drinks with food.

In the UK, it is available in a number of on-trade locations including Soho House, Hakkasan and Chiltern Firehouse.


Image: Diageo proposes to acquire Chinese spirits company. Photo: Courtesy of Dominic Morel/FreeImages.com.