Government to back Diageo China bid

 
Steve Dinneen
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THE government will throw its weight behind Diageo chief executive Paul Walsh this week as the drinks giant bids for a controlling stake in one of China’s biggest spirits-makers.

Diageo is awaiting clearance for the bid from Chinese authorities, with foreign takeovers usually viewed in a critical light.

The coalition-led trade group arriving in China today includes David Cameron, George Osborne and business secretary Vince Cable. Diageo hopes the official visit will act as a catalyst for regulatory approval that would allow it to establish a foothold in the Chinese drinks market.

The complex deal involves Diageo bidding for an additional four per cent stake in Sichuan Chengdu Quanxing Group, which would take its holding in the firm to 53 per cent. Quanxing is a holding company controlling a 39.7 stake in spirits maker Sichuan Shui Jing Fang. The additional stake in Quanxing would make Diageo the indirect controlling shareholder of ShuiJingFang, requiring it to make a mandatory tender offer for the whole company, worth £600m, according to Sky News.

Diageo said: “We are obviously grateful that the government intends to make representations in support of our position. That said, the regulatory decision on this acquisition, and the timing of that decision, are completely a matter for the Chinese authorities.” BOOTS IN CHINA:P14-15