Diageo warned on credit metrics despite debt-free Aviation buy

Alcoholic cocktail with Bacardi rum, Campari vermouth from Adobe 230x150
By Mike Turner
20 Aug 2020

Diageo, the UK distiller and brewer, has agreed to buy Aviation American Gin from Ryan Reynolds, the Deadpool actor. Despite the deal size being small by Diageo's standards and the company not taking on debt for the purchase, the buyer has had a warning shot across its bows over the impact on its credit quality.

Diageo said it would pay up to $610m for the gin company, an initial payment of $335m and up to $275m depending on the acquired company’s performance over the next 10 years.

The acquisitive company is using its own cash pile, which means no extra leverage. However, Moody’s has ...

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