Diageo will not buy a stake in Cobra Beer
In July 2008 leading drinks company Diageo was reportedly holding talks with Cobra Beer over the acquisition of a 30 percent stake in the brewer for USD 80 million to USD 100 million. Well, no more. Diageo confirmed at the end of August 2008 that negotiations have ended.
No reason for the termination of talks was given. But media pundits suspect that Diageo was not convinced of Cobra Beer’s short-term profitability. Cobra Beer, the lager brand controlled by Lord Karan Bilimoria, saw losses nearly treble in its most recent financial year as advertising, restructuring and the cost of expanding into India offset EUR 53 million in revenues.
Pre-tax losses at the UK-based private company hit GBP 13.1 million (EUR 16 million) in the 12 months to the end of July last year against a loss of GBP 4.4 million (EUR 5.5 million) in the same period a year earlier, according to accounts filed with Companies House.
Diageo’s Chief Executive Paul Walsh said at his company’s annual results presentation in London at the end of August that Diageo isn’t under pressure to increase its scale in the beer category despite recent consolidation in the industry. Diageo, which makes Guinness stout and lagers such as Red Stripe, would only consider acquiring a brewery business if it operated at the premium end of the market, Mr Walsh explained.
