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IPO May Lie Ahead For Stock Spirits If Current Sale Effort Falls Through

April 26, 2011

Amid reports that Diageo has ended its pursuit of Stock Spirits, the Central European company appears to be gearing up for a public offering. Stock has said it would consider a public offering if a sale did not materialize. Neither Diageo nor Stock responded to requests for comment, but Bloomberg News, citing unnamed sources, reported today that Stock majority owner Oaktree Capital (based in Los Angeles) has hired UniCredit SpA and Nomura Holdings Inc to handle preparations for an initial public offering.

Diageo has been the clear frontrunner to acquire Stock—which operates mainly in Poland and Czech Republic with its Czysta de Luxe vodka, Stock brandies and Limonce liqueur brands—but is said to have abandoned talks in recent days over Stock’s asking price of around $1 billion.

The addition of Stock would significantly strengthen Diageo’s hand in Eastern Europe— particularly in Poland, where Stock’s Czysta de Luxe is among the leading vodka brands with volume up 4% to 5.4 million cases in 2010, according to Impact Databank. Diageo’s own core vodka brand in the Polish market, Smirnoff Vladimir, has been in decline. Beyond Stock’s brands, an acquisition also would have provided a distribution platform in Poland and Czech Republic for Diageo’s international premium portfolio, similar to that which it recently gained in Turkey via its $2.1 billion purchase of that market’s leading player, Mey Içki.

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