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Diageo makes Chinese acquisition

The world’s largest spirits group made its first acquisition in the world’s largest market yesterday, as Diageo swooped to snap up a 43% stake in Sichuan Quanxing Group. The move dramatically increases the reach of the UK company into this most dynamic of markets, and also adds the first baiju spirit, Swell fun, to its broad portfolio of brands.

In recent months Sinchuan Quanxing has publicly expressed a desire to bolster international sales, and Diageo’s Chinese ambitions will be given a major boost by working alongside an organisation with a strong distribution network across the country.

The precise financial details of the deal are yet to be released, and it is still subject to the approval of the Chinese regulatory authorities. Diageo has issued a statement stating that the two companies will establish a joint venture, and indicating that this organisation will also be used as a base for sourcing packaging and other materials in China.

© db 13 December 2006

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