Diageo To Acquire Mey Iki, The Leading Spirits Company In Turkey

Diageo has reached agreement to acquire Mey Içki, the leading spirits company in Turkey, for an enterprise value of TL3,300 million (£1,300 million) from investment firm TPG Capital (TPG) and Actera. The transaction is expected to complete in the second half of calendar 2011, subject to regulatory clearances.

Mey Içki is the leading spirits producer and distributor in Turkey. In the financial year ended 31 December 2010 the company had net sales of TL766 million (£300 million) and EBIT of TL305 million (£120 million). It is the clear market leader in Raki, the biggest spirits category in Turkey, and has a leading position in vodka. In addition the company has an extensive nationwide sales and distribution network.

The acquisition is:

• Eps accretive Year 1 by approximately 1 %

• Economic profit positive Year 5 using a 13 % weighted average cost of capital

• A high growth, high margin business

Turkey is a substantial fast growing economy with a growing and increasingly affluent middle class and consumer spending is forecast to be twice the rate of GDP growth. The acquisition of the leading spirits company in this very attractive emerging market will allow Diageo to accelerate the growth of its complementary international spirits brands with increased access through Mey Içki’s strong distribution network and customer relationships in Turkey. Mey Içki will be consolidated as part of Diageo Europe and will continue to operate under the current management team. They have delivered strong growth over the last 3 years and as part of the transaction they are investing a percentage of their equity into an employee incentive scheme.