Diageo to gain control of famed PRC alcohol brand

Diageo, the UK-based global beverages company, is acquiring a controlling interest in its existing Chinese joint venture, Sichuan Chengdu Quangxing Group (Quanxing). It is also making a mandatory tender offer for PRC white spirits maker and Shanghai-listed Sichuan Shujingfang (Shuijingfang).

Chinese regulators have already approved Diageo's acquisition of an additional 4% stake in Quanxing from Chengdu Yingsheng Investment Holding for Rmb140 million (US$21.6 million). Once the transaction has been completed, Diageo's holding in Quanxing will increase to 53%. Quanxing is the largest shareholder of Shuijingfang, holding 39.7%.

Diageo is awaiting approval from the securities regulator to launch the required mandatory tender offer for the outstanding shares of Shuijingfang. If this is successful, the mandatory tender offer would be the first time that a foreign company has gained control of an important Chinese brand and the first successful foreign takeover of a mainland Chinese-listed company other than a financial institution.