US: Diageo sells off, leases back California wine assets
The Californian assets are valued at about US$260m
Diageo has secured a sale-and-leaseback arrangement for some of its wine assets in the US.
The drinks giant confirmed today (24 June) that certain land and facilities in Napa Valley in California will be acquired then leased back to its Diageo Chateau and Estate wines unit by Realty Income Corporation under a 20-year lease. Diageo will also hold options to extend the lease for up to 80 years in total.
The assets are valued in the region of US$260m.
“DC&E remains the operator of the properties under the lease agreement and retains ownership of the brands, vines and grapes, which remain a strategic part of Diageo’s wine business,” the company said.
The benefit to free cash flow in the year to the end of June is expected to be in the region of $200m. The transaction will also improve the return on invested capital of the DC&E business.
The agreement is expected to close by the end of this month.
For the current financial year, to the end of June, the impact of the restructuring, including the sale and leaseback, will be “broadly neutral” as the profit on the sale of land is offset by restructuring costs, inventory impairment and provisions made against the disposal of non-strategic brands.
Part three of our annual review of the year brings us Chris Mercer's look at how 2010 has treated the world's brewers....
Speculation has started circulating this week that Diageo may be looking to snap up Turkish spirits company Mey Içki from private equity firm TPG Capital. While Diageo won't be drawn on the rumours, a...
- Coca-Cola pressure builds as bid rumours swirl
- Gin: Plymouth's from Plymouth, London's from...?
- Why Chinese beverages won't conquer the world
- Fireball Recall: Putting Out Fire with Anti-Freeze
- Interview: Distell Vineyards & Estates' CEO
- Anheuser-Busch InBev cuts jobs in US shake-up
- Diageo targets Millenial women with Baileys push
- William Grant unveils bespoke Glenfiddich website
- Diageo unveils Ciroc in Times Square push
- NPD - DeLeon Tequila's Platinum and Reposado
- Early Signals: future scenarios that will drive consumption and product innovation over the next five years
- Global Scotch whisky insights - market forecasts, product innovation and consumer trends research
- Global Beer Opportunities: Beyond Standard Lager
- The IWSR Global Trends Report 2014
- Global Cognac insights - market forecasts, product innovation and consumer trends research