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Drinks giant Diageo seeks to buy slice of US whiskey distiller Beam

Smirnoff’s owner, the drinks giant Diageo, is reportedly eyeing a slice of the US-based whiskey producer Beam.

Diageo, which also owns Guinness and Baileys, has held talks with the Japanese brewer Suntory about striking a $10bn (£6.2bn) deal to acquire some of Beam’s brands. Diageo, which trades in 180 markets worldwide, is not believed to have made a formal offer yet and is not in current talks with Beam.

The historic Beam brand dates back to 1788 when Jacob Beam began distilling whiskey in the hills of Kentucky. Last year Beam’s former parent company, Fortune Brands, split itself into two US-listed companies – Fortune Brands Home & Security and Beam Inc.

Any Beam deal would be a departure from Diageo’s recent strategy of moving into emerging markets amid falling UK sales. Last month the London-based group announced it was targeting a thirst for spirits among the Indian middle classes by taking a stake in the Asian drinks giant United Spirits.

Diageo’s 112bn Indian rupee (£1.3bn) deal will give it a 53.4% slice of India’s largest spirits company.

And in February Diageo announced a £1.3bn deal to snap up Turkey’s biggest spirits producer, Mey Icki.

Suntory, which owns the Japanese whisky brand Yamazaki and the fizzy drink group Orangina, is understood to have spoken to other parties about a joint bid since it ended talks with Diageo in the summer. Diageo is also believed to have had discussions with other companies including private equity firms.

Diageo, which is the world’s largest whisky producer, is reportedly only interested in some of Beam’s brands, which include the bourbon whiskey Jim Beam.

According to the Sunday Telegraph, Diageo has delayed making a formal takeover offer partly because it is only willing to pay $65 a share for the US business. Beam’s shares were changing hands at just below $60 at the end of last week. If the UK company does pursue a bid next year it could face rival bids from privately owned Bacardi and the French Pernod Ricard group.

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