Sale Represents Largest Amount Ever for FTC Ordered Divestiture
Diageo plc has received Federal Trade Commission approval to sell the Dewar's Scotch, Bombay Gin and Bombay Sapphire gin brands to Bacardi & Company Limited for $1.9 billion, the agency announced today. Diageo is the new company formed as a result of the merger of Guinness plc and Grand Metropolitan plc. The sale was required by the FTC as part of the agency's approval of the Guinness and Grand Met merger.
The merger of Guinness and Grand Met, the Commission alleged, raised significant competitive concerns in the United States market for premium Scotch and premium gin. In premium Scotch, the merger would have combined Guinness' Johnnie Walker Red and Dewar's White Label and Grant Met's J&B Rare. According to the Commission, these brands comprise 92 percent of all premium Scotch sales. In premium gin, Guinness had Tanqueray and Grand Met had Bombay and Bombay Sapphire. Together, these brands comprise 58 percent of all premium gin sales, the agency said.
On April 24, 1998, Diageo filed an "Application for Approval of Divestiture" proposing to divest both Dewar's assets and the Bombay assets to Bacardi. The application was placed on the public record for 30 days, until May 29, 1998, and no comments were received.
Bacardi is the fourth largest distilled spirits company in the world. According to the FTC, Bacardi does not presently compete in the premium Scotch and gin markets in the United States. It does have experience making both gin and scotch and is acquiring all the necessary assets to compete successfully, the agency said.
The Commission vote to approve the divestiture was 4-0.
Copies of FTC press releases and other documents are available on the FTC's World Wide Web site at: http:www.ftc.gov (no period) and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Ave., N.W., Washington, D.C., 202-382-4357: TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. C 3801)
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