Diageo Gets Approval For Chinese Baijiu PlayJune 27, 2011
After a wait of several months, Diageo has gained Chinese regulatory approval to pay RMB140 million ($22m) to up its stake in Sichuan Chengdu Quanxing Group by 4%, bringing its holding in the group to 53%. Under Chinese law, that play has triggered a mandatory tender offer by Diageo for premium Chinese white spirits player Shui Jing Fang, of which Quanxing is the largest shareholder at 39.7%. Diageo expects the go-ahead for that offer to come from the China Securities Regulatory Commission “in due course.” If all of Shui Jing Fang’s other shareholders accept Diageo’s offer, the drinks giant will be laying out approximately RMB6.3 billion ($972m) for the baijiu maker, China’s fourth-largest by volume in the super-premium segment, with sales of nearly $200 million annually. Separately, Diageo has agreed to facilitate financing for Quanxing of up to RMB2 billion ($309m).Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.