Diageo - Acquisition of controlling interest in Chinese joint venture and expected mandatory offer for Sichuan ShuiJingFang

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Slaughter and May is advising Diageo on its acquisition of a controlling interest in its existing Chinese joint venture, Sichuan Chengdu Quangxing Group Co., Ltd. ("Quanxing"), and on its expected mandatory tender offer for Sichuan Shuijingfang Co., Ltd. ("ShuiJingFang"), a leading super premium Chinese white spirits company listed on the Shanghai Stock Exchange.

Chinese regulators have approved Diageo's acquisition of an additional 4% stake (the "4% transfer") in Quanxing from Chengdu Yingsheng Investment Holding Co., Ltd. Steps are now being taken to complete the 4% transfer for a consideration of about RMB 140 million (£13 million). Once completed, this 4% transfer will bring Diageo's holding in Quanxing to 53%. Quanxing is currently the largest shareholder of ShuiJingFang, which is listed on the Shanghai Stock Exchange.

Diageo is now seeking approval from the China Securities Regulatory Commission to launch the required mandatory tender offer for the outstanding shares of ShuiJingFang, in which Quanxing holds a 39.7% stake.

The maximum value payable under the expected mandatory tender offer is RMB 6.3 billion (£609 million). ShuiJingFang is the fourth largest super premium Chinese white spirits brand by volume in China.

Diageo plc is the world's leading premium drinks business with a collection of international brands spanning spirits, wine and beer. It is listed on both the London Stock Exchange and the New York Stock Exchange.

Neil Hyman (partner), Vanessa Cheung (associate), Jessica Li (associate)