UK drinks company Diageo has announced the acquisition of Turkish spirits firm Mey Icki Sanayi & Ticaret for £1.3 billion.
Mey is one of the largest alcohol producers in Turkey, controlling around 80 per cent of the market for the Turkish national drink, raki. It also controls around 65 per cent of the country’s vodka market.
The deal will give Diageo access to Mey’s extensive distribution network as well as its production facilities. The Istanbul-based company currently has 50,000 retail outlets across Turkey.
Commenting, Paul Walsh, CEO of Diageo, said: “Turkey is an attractive, growing market for Diageo with strong GDP growth. The acquisition of Mey Içki transforms our existing position in this fast growing spirits market. It gives us leading brands in the major local spirits categories, a superior distribution network and a proven management team.
“The acquisition of Mey Içki will also provide Diageo with an outstanding platform from which to accelerate the long term growth of our premium international spirits brands in Turkey. The acquisition meets our return criterion and delivers top line growth above the Diageo average, and margin expansion. I am delighted to welcome the Mey Içki brands and management team to Diageo.”
Diageo, which owns brands such as Smirnoff vodka and Johnnie Walker whisky, is seeking to make acquisitions in fast-growing markets, where it currently makes around a third of its profits. The London-based company’s European sales have been declining recently, so it plans to tap into the strong local brands of emerging markets as well as increase distribution of its own international brands.
The company is also currently bidding for a stake in Sichuan Chengdu Quanxing Group, which will add the Chinese spirit baiju to its portfolio if successful.
In the financial year ending 31 December 2010, Mey had net sales of £300 million and profits of £120 million.
