Diageo In $260M Leaseback, Sale Pact For Napa Valley Assets

24th Jun 2010 13:42

LONDON (Dow Jones)--Diageo PLC (DGE.LN), a multinational beer, wine and spirits company that includes Smirnoff vodka and Johnny Walker scotch whiskey brands in its portfolio, said Thursday it has entered into a sale and leaseback arrangement in respect to certain land and facilities located in Napa Valley, California valued at GBP174 million, or $260 million. MAIN FACTS: -The land and facilities will be purchased and leased back to Diageo by Realty Income Corporation (O) under a 20 year lease, with Diageo holding options to extend the lease for up to 80 years in total. -Diageo Chateau and Estate wines remains the operator of the properties under the lease agreement and retains ownership of the brands, vines and grapes, which remain a strategic part of Diageo's wine business. -Purchase and lease agreement is expected to close no later than June 30. -Impact of the restructuring, including the sale and leaseback, on the income statement for the year ending June 30, will be broadly neutral. -Benefit to free cash flow in the year ending June 30, 2010 is expected to be in the region of GBP134 million. -Transaction will also improve the return on invested capital of the Diageo Chateau and Estate business. -Shares at 1240 GMT down 9.86 pence, or 0.9%, at 1078.14 pence valuing the company at GBP27.16 billion. -By Ian Walker, Dow Jones Newswires; 44-20-7842-9296; [email protected] (END) Dow Jones Newswires June 24, 2010 08:42 ET (12:42 GMT)