DEO - Diageo to buy Don Papa rum brand for Euro260M initial payment

• The UK-based distiller, Diageo ( NYSE: DEO ) has agreed to buy Don Papa Rum, a high-end dark rum from the Philippines, in a deal worth up to about $473M.
• The owner of Johnnie Walker whisky and Tanqueray gin will pay €260M ($281M) as an initial payment and up to €177.5M ($192.2M) through to 2028, depending on the brand’s performance.
• Don Papa was launched in 2012 by former Rémy Cointreau executive Stephen Carroll. It is now available in 30 countries, with France, Germany and Italy being its largest markets.
• The transaction is expected to close in the first half of this year.
• The deal amount will be funded through existing cash reserves.
• John Kennedy, president of Diageo Europe and India, said “This acquisition is in line with our strategy to acquire high-growth brands with attractive margins that support premiumisation, and enables us to participate in the fast-growing super-premium-plus segment.”
• The company is all set to release its financial results on January 26.
• DEO stock lost about 12% past 12 months.
• See why SA contributor Deep Value ideas says, " Diageo has a brand portfolio that I believe is stronger ."

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