Diageo has told the Office of Fair Trading that it would be willing to sell the Whyte & Mackay, Jura, Invergordon and Fettercairn distilleries in order to address competition issues due to its acquisition of a controlling interest (25%) in United Spirits. However it hopes to hold onto Dalmore and Tamnavulin. Diageo’s aim is to avoid a lengthy referral to the Competition Commission after the company gained 40% control of the blended whisky market after inheriting Whyte & Mackay when it bought into United Spirits. Anaylsts are estimating that the value off Whyte & Mackay would be between £350 and £600 million despite United Spirits, then boss Vijay Mallya, paying $1.2 billion in 2007.
Diageo it is thought would like to hold onto Tamnavulin as it does a lot of volume which goes to India, and therefore is not an issue for the OFT. While Dalmore has capacity for more volume. Potential buyers could include Beam Inc and Bacardi.
Diageo sales rose 1.1% following the news and in the interim the the OFT’s duty to refer the merger to the Competition Commission is suspended while it considers Diageo’s solution.
