Diageo now owns 39.7% of Chinese baijiu producer Shuijingfang

Diageo now owns 39.7% of Chinese baijiu producer Shuijingfang

Diageo is set to assume full control of Sichuan Chengdu Shuijingfang Group Co, the largest shareholder in Chinese baijiu producer Shuijingfang.

The company confirmed earlier today (23 July) that it will spend around GBP233m (US$356.9m) on acquiring the remaining 47% stake it does not already own in Sichuan Chengdu Shuijingfang (SJF Holdco). As a result of the buy, Diageo's indirect holding in Shuijingfang will rise from 21.05% to 39.71%.

Diageo, which bought its initial 43% stake in SJF Holdco in 2007 and raised it to 49% a year later, triggered a mandatory tender offer for Shuijingfang in 2010, when it upped its SJF Holdco stake to 53%. The UK-based company deliberately priced the MTO at the lowest possible amount allowed by law, in order to keep the domestic interest in Shuijingfang at a high level.

“Diageo will continue to work with the senior Chinese management to build Shuijingfang into the leading international baijiu brand,” said Diageo's Asia Pacific president, Gilbert Ghostine.

SJF Holdco, which was formerly known as Sichuan Chengdu Quanxing, will subsequently become a “wholly foreign-owned enterprise”, Diageo said.