The drinks company Diageo is considering cashing in on booming demand for pints of Guinness by selling or listing the famous beer brand on the stock market, according to reports.
Selling or spinning off Guinness are among a number of options being considered by the FTSE 100 company as part of a plan to revive its fortunes, according to Bloomberg which first reported the story.
The stout, which has become fashionable with gen Z drinkers, would probably be “valued north of $10bn (£8bn)” if it was spun off or sold, Bloomberg said. The runaway demand for Guinness, which resulted in shortages at Christmas, has been a bright spot during an otherwise challenging period for the group.
The speculation sent Diageo’s shares to the top of the FTSE 100 leaderboard on Friday, closing up more than 4%. Its share price has been in the doldrums since Debra Crew took over as chief executive in the summer of 2023 only to issue a profit alert just months into her tenure. The November profit warning sent Diageo’s shares down to their lowest level since 2017.
When the company provides a half-yearly update to investors next month, Bloomberg suggested Crew could scrap or lower its sales growth targets. However, its sources also suggested bigger changes were needed at the group, which also owns a 34% stake in LVMH’s champagne and cognac business Moët Hennessy.
If it wanted to sell, LVMH has an obligation to buy it, albeit at a 20% discount to its fair value, according to the agreement. Should Diageo seek to take full ownership of the upmarket drinks business, it would probably need to raise cash by issuing new shares or selling its beer business, analysts said.
Diageo has already reportedly looked at the potential sale of its Pimm’s liqueur and Ciroc vodka brands over the past year.
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Diageo said it did not comment on market rumour.
Article by:Source: Zoe Wood
