Diageo aims for push into Turkey

Diageo is in preliminary talks to buy Turkish spirits company Mey Icki, sources said – part of the push by the world's biggest drinks company into high-growth emerging markets.

Diageo has expressed interest in paying up to $2.5bn (1.5bn) for the dominant producer of Turkey's anise-flavoured national drink, raki, sources said.

A sale would give private equity owner TPG an alternative to an initial public offering (IPO) and could kick-start a dual track sales process.

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"The talks are early stage, and it is unclear whether they will lead to anything," the source said.

Diageo has been pushing into fast-growing developing markets, where it makes around one third of its profits, seeking to tap into strong domestic brands and appetite for its range of international spirits, including Johnnie Walker Whisky and Smirnoff vodka.

A deal for Mey Icki would have similarities with Diageo's drive to increase its exposure in China, where it is bidding to take control of local group Sichuan Chengdu Quanxing, to increase exposure to domestic spirit Baiju and secure better distribution for its own brands.

Mey Icki, as the Turkey's leading spirits producer, has access to some 50,000 retail outlets across Turkey.

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Two-thirds of the country's population of 73 million are under the age of 32.

A Diageo takeover of Mey Icki would nevertheless be complex, and would require the resolution of a long-running dispute with Turkey's tax authorities over payment of customs duties, it was reported .

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