Diageo Plc Enters Into £23m Joint-Venture

The Motley Fool

News that Diageo (LSE: DGE) (NYSE: DEO.US) has reached an agreement to form a 50:50 joint-venture broke today, increasing the FTSE 100 company's global reach.

It has entered into an agreement to acquire a 50% interest in the company that owns United National Breweries' traditional sorghum beer business in South Africa for approximately £23m.

The seeds of the deal were sewn back in November 2012 when Diageo and Dr Mallya announced they had entered into a "memorandum of understanding" under which they would form the 50:50 joint-venture. Today's confirmation reported that the remaining 50% will be held by a company affiliated to Dr Mallya.

The transaction is conditional on, among other things, consent from the South African competition authority, and is expected to complete in the first half of this year.

Diageo's shares lifted marginally on the news, and have reached over 1,860p -- putting on almost 60p from when I earmarked them as a potential buying opportunity less than two weeks ago, suggesting that there's still growth prospects within this drinks Goliath.

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