Chinese regulators have approved Diageo’s acquisition of an additional four per cent stake in Sichuan Chengdu Quanxing Group, a Chinese white spirits company.
The deal is worth £13 million, Diageo said.
Once completed, the four per cent transfer will bring Diageo’s holding in Quanxing to 53 per cent.
Diageo has agreed to facilitate financing for Quanxing of up to approximately £193 million for the development of its main business.
Diageo is now seeking approval from the China Securities Regulatory Commission to launch the required mandatory tender offer for the outstanding shares of ShuiJingFang—a brand of the popular Chinese spirit Baijiu—in which Quanxing holds a 39.7 per cent stake.
Paul Walsh, chief executive of Diageo, commented: “I am delighted that Diageo's application to increase its investment in Quanxing has been approved by the Chinese authorities. We look forward to working with our Chinese partners to further develop the ShuiJingFang brand both domestically and overseas.
“We are privileged to have the unique opportunity to participate at scale in super premium Chinese white spirits, one of the largest, fastest growing spirits segments in the world. I am appreciative of the vote of confidence Diageo has received from the Chinese authorities and the tremendous support we have had from our own government as we seek opportunities for growth in our business.”
Gilbert Ghostine, president of Diageo Asia Pacific, added: “We are thrilled with the opportunity we have been given to increase our investment in ShuijingFang and to deepen our partnership with the Quanxing Group. I am confident that we have chosen the best possible partner in super-premium Chinese white spirits and look forward to working with them as we grow our position in this exciting category.”
Diageo brands include Johnnie Walker, Smirnoff, Baileys, José Cuervo and Guinness. The company is headquartered in London, UK, and employs around 20,000 people.
