DIAGEO is looking to splash out £500m (€578.5m) on one of central Europe’s biggest drinks companies just weeks after buying a leading Turkish spirits producer.
The FTSE 100 drinks group, which makes Smirnoff vodka and Johnnie Walker whisky, is understood to be bidding for Stock Spirits, a UK-based firm whose brands include Czysta de Luxe, an upmarket Polish vodka.
The surprise bid for Stock is part of an ambitious push by Paul Walsh, Diageo’s chief executive, into emerging markets. The company is keen to reduce its reliance on the developed world, where it makes about two-thirds of its sales.
Formed in 1997 from the merger of Guinness and Grand Metropolitan, Diageo has become the world’s biggest spirits firm, with brands such as Captain Morgan rum. It has annual sales of £10 billion.
Last month, it paid £1.3 billion for Mey Icki, Turkey’s largest producer of raki, the national drink.
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Diageo has since made it through to the second round of bidding for Stock, which has been put up for sale by Oaktree Capital, an American investment fund that specialises in turning round companies.
Diageo faces competition from a handful of private equity funds, believed to include Apax. Any deal is likely to value the vodka maker at $800m (€576m) to $850m.
Stock Spirits was established in 2007 when Oaktree merged the Czech business Stock with Polmos Lublin, its Polish counterpart, which Oaktree had acquired a year earlier. The enlarged business sells almost 40 brands of vodka, including Zoladkowa Gorzka, Poland’s most popular brand, Keglevich and Orzel. In 2009, Stock reported earnings of €63m on sales of €262m.