Diageo PLC (DEO) has dismissed rumors about the potential spin-off or sale of its beer brand, Guinness. The company put media speculation to rest after reports emerged last week suggesting it was considering asset sales to accelerate growth, fueled by strong demand for Guinness. Additionally, the drinks giant denied plans to sell its 34% stake in the champagne and cognac business Moët Hennessy.
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Diageo owns around 200 well-known brands, including Baileys, Smirnoff, Tanqueray, Guinness, and many others.
Diageo Stands Firm on Guinness and Moët Hennessy
The company took a firm stand on its brands, Guinness and Moët Hennessy, keeping their stakes intact. In a statement, Diageo clarified that it had “no intention to sell either,” addressing media reports from earlier in the week.
Additionally, the report suggested that Guinness, potentially up for private sale or public listing, could be valued at over $10 billion. Notably, Guinness has seen a significant rise in popularity recently, thanks in part to social media’s influence, which attracted a younger audience. Unlike many other brands in Diageo’s portfolio, which mainly focuses on spirits, Guinness stands out as a beer brand.
As a result, the potential sale of Guinness was viewed as a strategy to revitalize the company’s performance, providing a cash boost for Diageo. This comes after a challenging period marked by lower sales volumes and a struggling share price. Analysts also suggest that selling Guinness could be a highly profitable move for Diageo, as it is one of the company’s top-performing brands.
Diageo will announce its half-year results on February 4.
Is Diageo a Good Buy Now?
According to TipRanks’ consensus, DEO stock has a Strong Buy rating based on three Buy recommendations. The average Diageo share price target is $142.67, which is 15% above the current trading levels.
