Diageo has approached the board of directors of Sichuan Shuijingfang Company with a proposal for a partial tender offer to increase its aggregate equity stake in the Chinese firm from approximately 39.7% to up to 60%.
Shanghai-listed Sichuan in mainly engaged in the manufacture and sale of alcoholic products. It provides liquor products under the brand of Swellfun and its wine products include Swellfun Diancang, Swellfun Jingtai and Swellfun Zhenniang No. 8. It distributes its products within both domestic and overseas markets.
Diageo – which owns brands such as Smirnoff vodka, Gordon’s gin and Casamigos tequila – said that the announcement does not constitute the announcement of an offer and creates no obligation on the company to make an offer.
In its half-year financial results posted in January, Diageo saw its net sales rose by 1.7% to reach £6.53 billion and its operating profit increased by 6.1% to £2.19 billion.
China represents a small part of Diageo’s business, but the firm posted a net sales increase by 32% in Greater China in its half-year figures.
The company’s Chinese white spirits net sales grew 80%, driven by expanded distribution beyond its core 17 provinces.
Sichaun said it would not be de-listed if a deal goes through.
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