Diageo and the Nolet family are to form a new company owning the exclusive global rights to sell, market and distribute Ketel One vodka, in a move that confirms Diageo is out of the running in the sale of Vin & Sprit.

Speaking to just drinks today (6 February), Diageo described the US$900m deal for a 50% equity interest in the newly-formed Netherlands-based company, as " a fair price in the world of spirits". The Nolet family will take ownership of the remaining 50%, with both parties sharing profits from sales, marketing and distribution operations equally.

As part of the deal, the Nolet family will continue to own the brand rights for Ketel One and maintain ownership of its distillery based in Schiedam in Holland. Diageo will consolidate the financial results of the new company, accounting for the Nolet holding as a minority interest and become the vodka brand's exclusive global distributor.

Ketel One, primarily a North American brand in the super-premium vodka category, has an annual volume of 1.9m cases set to complement Diageo's Smirnoff and Ciroc vodka brands, the company said.

The transaction is set to close by 31 March, subject to the required regulatory approvals and other conditions. Should either party decide to sell its stake in the company, the other party will hold the right to buy it at a price to be agreed. The Nolet family also has the additional right to put its stake in the company to Diageo in the 4th or 5th year after closing for $900m plus interest.

Diageo CEO Paul Walsh said: "This transaction is strategically important for Diageo, giving us an interest in an outstanding high quality brand and fantastic potential for global growth in the super-premium vodka segment. The new company represents a unique alliance in our industry. Diageo brings superior marketing and distribution expertise, together with a track record of outstanding brand stewardship and the Nolet family brings a truly great brand, based on a high quality distillation operation and invaluable knowledge and heritage gained from over 300 years of tradition."

Carel Nolet Sr added: "The partnership between Nolet and Diageo will combine our brand building and entrepreneurial skills with the unrivalled brand management, marketing and distribution expertise of Diageo to fully develop the potential of Ketel One vodka in the US and globally."

Diageo had previously expressed an interest in bidding for Vin & Sprit, the Swedish state-owned makers of Absolut vodka.

However, a spokesperson for Diageo told just-drinks: "It was so obvious that it [Ketel One] has the greater potential; that we didn't actually even bid for Absolut."

The spokesperson added: "When the V&S sale was announced we registered our interest and we looked at it as well as Ketel One, but we just concluded it (Ketel One) to be a better fit for the rate of potential for growth. We think there is lots of room to improve this brand because we have fantastic distribution in the US."

Other groups interested in Vin & Sprit include Pernod Ricard, Fortune Brands, Bacardi and private equity firms Investor and EQT.