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Beer and spirits maker Diageo plc (NYSE:DEO) has said that it is selling its 80.4% stake in Guinness Ghana Breweries plc to Castel Group, deepening its ongoing collaboration with the African multinational.
Although this sale takes place, Diageo will still hold the rights to the renowned Guinness brand, along with other products it currently manufactures at the brewery.
These items will remain in production under a new long-term licensing and royalty arrangement, according to Diageo.
The company will continue to oversee the marketing and strategy for the Guinness brand in partnership with Castel.
This arrangement will enable Diageo to retain control over the brand’s direction while leveraging Castel’s regional expertise. The collaboration with Castel spans 11 additional African markets, where the companies already work together.
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“Guinness Ghana is performing strongly powered by a fantastic team of people. Through this transaction, I look forward to the Guinness brand continuing to thrive and delivering further growth,” said President Diageo Africa and Chief Commercial Officer Dayalan Nayager.
All Diageo brands currently produced by Guinness Ghana, including Guinness, Malta, Orijin, Smirnoff Ice and Alvaro, and mainstream spririts, will continue to be produced under new license and royalty agreements.
This move supports Diageo’s asset-light business model, which emphasizes tailoring market approaches to local conditions in order to boost profitability.
This transaction is part of Diageo’s ongoing efforts to manage its portfolio, building on the recent sale of its stake in Guinness Nigeria and other strategic actions designed to accelerate growth in West Africa.
Price Action: DEO shares are trading lower by 0.87% at $122.46 in premarket at the last check Wednesday.
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Posted In: DEO
