Broker snap: Spirits high at Diageo

7th Feb 2011 12:11

Nomura likes Diageo's willingness to get involved in spirits mergers and acquisitions (M&A) following its recent Vietnamese purchase, and highlights more deals that would likely add value to the drinks giant.On 26 January, Diageo - the company behind Guinness and a host of spirits brands - acquired nearly a quarter of spirits company Halico for about £33m, whose main brand is Vodka Hanoi. Now, the Japanese broker says that the group would be interested potentially in three Fortune brands - Jim Beam bourbon, Sauza tequila and Makers Mark bourbon."We see improving trading trends in North America, as well as continuing strong momentum in international markets. Given the M&A opportunities, we do not expect the company to restart its buyback," says analyst Ian Shackleton.The broker confirms a 'buy' rating and 1,550p target price.