British brewer Diageo is set to shift 19 brands out of its drinks cabinet for a total of $550m (£428.1m) in order to focus on classier tipples, it said today.
The company behind drinks such as Guinness and Smirnoff will sell the brands to US rival Sazerac, parting with brands Seagram’s VO, Seagram’s 83, Seagram’s Five Star, Myers’s Rum, Parrot Bay, Romana Sambuca, Popov, Yukon Jack, Goldschlager, Stirrings, The Club, Scoresby, Black Haus, Peligroso, Relska, Grind, Piehole, Booth’s and John Begg.
The net proceeds will see approximately £340m returned to shareholders through a share repurchase programme once the deal has gone through, which will be on top of a previously announced programme of up to £2bn.
Diageo's share price dropped slightly on the news before ticking upwards.
The sale, which is subject to regulatory approval, is expected to complete early in 2019.
Ivan Menezes, chief executive of Diageo, said the company had a clear strategy to deliver consistent growth and value creation for shareholders.
"This includes a disciplined approach to allocating resources and capital to ensure we maximise returns over time," he said.
"Today’s announcement is another example of this strategy in action. The disposal of these brands enables us to have even greater focus on the faster growing premium and above brands in the US spirits portfolio.”.