Diageo sells Edward Dillon shares

Diageo Ireland, owner of Guinness, has sold its shareholding in the drinks distributor Edward Dillon & Co for an undisclosed sum, it has emerged.

From now on Diageo itself will distribute the brands previously handled by Dillon. The brands are believed to include Gordon's Gin and Black and White whiskey.

Based on volume, Diageo brands represented about 6 per cent of Dillon's activities, but Diageo's stake in the company was much larger at about 30 per cent, according to sources.

A statement from Dillon said: "This agreement follows management-led discussions with the shareholders in Edward Dillon: Bacardi, Brown-Forman, Diageo and Moët Hennessy in advance of the 2006 anniversary of their distribution agreements."

Bacardi, Brown-Forman and Moët Hennessy have now agreed to buy the Diageo stake, although the parties refused to disclose the purchase price.

"Pursuant to this agreement, Bacardi, Brown-Forman and Moët Hennessy will increase their shareholdings to take up the full issued share capital of Edward Dillon and have each entered into new long term distribution agreements with the company," said the company.

Mr John Pearson, managing director of Edward Dillon, said the deal would provide a solid long-term framework for Dillon. He said the Diageo brands were transferring "in good health" to Diageo Ireland.

"Our human resources have been managed carefully over the past year in anticipation of these events so there will be no reduction in employee numbers as a result of this announcement. We retain an unrivalled portfolio of premium spirit and wine brands whose further development will drive the company's longer-term growth plans," he said.

Mr Michael Ioakimides, managing director of Diageo Ireland, said his company would ensure the smooth transition of the brands to Diageo Ireland on October 1st.

Dillon recently reported an almost 11 per cent rise in pre-tax profits as consumption of leading drink brands continued to grow.

The accounts for the company, based in Mountjoy Square in Dublin, showed pre-tax profits for the year ended September 30th, 2003, up to €8.2 million from €7.4 million in the year before.

The company's turnover was up from €126 million to €129.5 million. The accounts lodged with the Companies Office said Dillon's principal activity was the importation and distribution of alcoholic beverages.

"The group and company continued to make progress during the year," the accounts stated.