Diageo is reported to be exploring a potential spin-off or sale of Guinness, in what would be the biggest corporate change for the Irish beer brand since it was merged with Grand Metropolitan in 1997.
Stock market-listed Diageo is also reviewing its stake in LVMH’s drinks unit, Moet Hennessy, Bloomberg News reported on Friday, citing people familiar with the matter.
Guinness would likely be valued at above $10bn, Bloomberg reported, citing the sources.
A spin-off would create a standalone business with the same owners, while a sale would require a buyer likely to come either from the brewing sector or private equity.
Read more
Guinness sales are at a high, boosted by a renewed popularity among younger drinkers in the UK as well as the strength of its traditional base in Ireland.
The drinks giant struggled to keep up with demand at the end of last year even as other parts of the Diageo business are struggling to grow. The drinks giant is due to publish financial results next year.
The London-listed company could look to deepen its ownership in the Moet Hennessy venture, or exit altogether, the report said, adding that if Diageo wanted to sell the stake, LVMH has an obligation to buy it, although at a 20% discount to its fair value, as per their agreement.
Diageo did not immediately respond to a request for comment; LVMH declined to comment.
Shares in Diageo, which have been under severe pressure for months, shot up after news of the possible Guinness disposals, rising 4.4% on Friday.
Damages revealed as Storm Éowyn hits Northern Ireland