Spending 4.7 billion on a ten-year-old room

Spending 4.7 billion on a ten-year-old room

On Tuesday it announced that the company had reached an agreement to buy Don Papa Rum for up to 437.5 million euros, about NOK 4.7 billion.

In a press release from Diageo, the world’s largest multinational beer, wine and spirits company, the company put the purchase price at €260, while at the same time saying that the purchase price could be another €177.5 million more expensive until 2028, but that’s conditional on performance.

Strong growth: Don Papa Rum has been growing at an average annual rate of 29 percent in recent years. Photo: Don Baba Rum

The acquisition will be funded by existing cash reserves and is expected to be completed during the first half of this year.

29% annual growth rate

According to a Diageo press release, Don Papa Rum is a very dark rum from the Philippines that falls into the “super plus” category – a segment in the early stages of premiumwith an annual growth rate of 18 percent in Europe and 27 percent in the United States between 2016 and 2021. By comparison, Don Papa Rum achieved an annual growth rate of 29 percent.

– This acquisition is in line with our strategy of acquiring high-growth brands and attractive margins that underpin franchising, and enables us to participate in a rapidly growing ‘premium plus’ segment, says Europe and India – Diageo CEO, JFK.

Launched in 2012, Room is available in 30 countries, but France, Germany and Italy are its biggest markets.

Stephen Carroll, founder and managing director of Don Papa Rum, will continue to be involved in the operation, and will work with Diageo to build on the rum’s growth potential.

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Diageo already owns brands like Johnnie Walker, Smirnoff, Captain Morgan, Baileys, and Guinness.

Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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