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PRESS RELEASE28 May 2012

Diageo to acquire Ypióca the leading premium Cachaça brand in Brazil Download file

Diageo, the world's leading premium drinks business, has reached agreement with Ypióca Agroindustrial Limitada to acquire the leading premium cachaça brand, Ypióca, and certain production assets.

The consideration is BRL 900 million (approximately £300 million) in cash and the transaction is expected to complete in a month. The acquisition is expected to be EPS neutral in year 1 and Economic Profit positive in year 5 using a 12% WACC rate. It expands Diageo’s presence in Brazil and enhances access to the growing number of middle class consumers who are driving the growth of premium brands.

The acquired Ypióca brand has net sales of BRL 177 million (approximately £60 million) based on the pro forma adjusted figures as of December 2011.

Cachaça is the largest spirits category in Brazil and Ypióca is the leader in the growing premium cachaça segment. It is the number 2 by value and the number 3 by volume in the overall cachaça category. In addition, Ypióca has an extensive sales and distribution network in the Northeast of Brazil and the second largest retail penetration nationwide.
Paul Walsh, CEO of Diageo commented:

”Brazil is an attractive, fast growing market for Diageo with favourable demographics and increasing disposable incomes. The acquisition of Ypióca gives us the leading premium brand in the largest local spirits category. It will also provide Diageo with an enhanced platform from which to accelerate the long term growth of our premium international spirits brands in Brazil.

”The acquisition meets our return criteria and will be accretive to Diageo’s top line growth.

”This investment represents the continuation of our strategy to increase Diageo’s presence in the fastest growing economies of the world.”

ENDS

Notes to editors:
Morgan Stanley acted as financial advisors to Diageo in this transaction.

About Diageo
Diageo is the world's leading premium drinks business with an outstanding collection of beverage alcohol brands across spirits, beer and wine. These brands include Johnnie Walker, Crown Royal, JεB, Windsor, Buchanan’s and Bushmills whiskies, Smirnoff, Cîroc and Ketel One vodkas, Baileys, Captain Morgan, Jose Cuervo, Tanqueray and Guinness.
Diageo is a global company, with its products sold in more than 180 countries around the world. The company is listed on both the New York Stock Exchange (DEO) and the London Stock Exchange (DGE). For more information about Diageo, its people, brands, and performance, visit us at Diageo.com. For our global resource that promotes responsible drinking through the sharing of best practice tools, information and initiatives, visit DRINKiQ.com.

Celebrating life, every day, everywhere.

About Ypióca:
Ypióca is a leading premium cachaça brand in Brazil, with more than 160 years of heritage. Diageo’s acquisition of the Ypióca brand will include a cachaça distillery in Paraipaba/Ceará, a bottling plant in Fortaleza/Ceará and a warehouse in Guarulhos/São Paulo. Ypióca has an 8% market share of the total cachaça category, at 6.6million 9L cases.

For further information:

Investor enquiries to:
Catherine James
+44 (0) 7803 854 550
Agnes Bota
+36 1 580 1022
investor.relations@diageo.com

Media enquiries to:
Kirsty King
+44 (0) 20 8978 6855
Stephen Doherty
+44 (0) 20 8978 2528
media.comms@diageo.com

Analyst materials:
Additional materials are available to download below

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