SOUTH KOREA – World’s top Scotch whiskey producer Diageo’s plan to sell Korea-origin whiskey brand Windsor has hit a snag as a South Korean-based equity group Bayside Private Equity and Metis Private Equity (Bayside/Metis) consortium failed to meet certain conditions part of the agreement.
Diageo had agreed to sell the premium Scotch whisky brand to the South Korean private equity group for KRW 200 billion (approx. US$120.57 million), in March.
The transaction, which included the W series, was due to be completed in fiscal 2023.
Diageo Korea decided to shed Windsor, which was behind 60 percent of whiskey sales, amid softening trend in drinking among Koreans during the pandemic.
During the announcement of the sale, Sam Fischer, president of the Asia Pacific and global travel for Diageo, said: “This transaction marks the next chapter for Diageo Korea. We remain fully committed to the market and further developing our international spirits and beer business, which is being driven by premiumization and consumer interest in categories like international whisky.”
According to Maell Business News Korea, Kosdaq-listed firm WI announced that it has decided to cancel the issuance of convertible bonds worth 80 billion won ($61.5 million) aimed to finance its share of Windsor buyout from Diageo Korea after the funding vehicle Orbit-W1 investment association failed to raise enough funding.
WI is the key member of the preferred consortium also composed of Bayside Private Equity and Metis Private Equity (Bayside/ Metis). The consortium agreed on a deal with Diageo Korea to buy Windsor for 200 billion won.
WI originally planned to come up with 80 billion won through the CB issue and the Bayside/ Metis 50 billion won through project funding while the remaining amount was to be sourced from Hana Bank as a loan.
The Korean News firm indicated that the deal was on the verge of a breakdown due to WI`s walkout, however, Diageo did not indicate the exact condition that was never met but said the deal has now been terminated.
Now that no more transactions are to take place, Windsor Global will continue to operate the Windsor business under an independent entity to the Diageo Korea spirits and beer arm.
The deal, part of Diageo’s “active portfolio management”, comes hot on the heels of the firm’s sale of its peach schnapps brand Archers to Dutch firm De Kuyper earlier this month.
Furthermore, in May, Diageo’s Indian arm, United Spirits, agreed to offload its ‘Popular’ business of 32 brands to Inbrew Beverages for approximately 8.2 billion rupees (US$105.7m).
However, Diageo has continued to make investments, including the recent purchase of a minority stake in gin producer Nao Spirits, through its Indian subsidiary.
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