Diageo

1. What do you think about the capital structure policies Diageo has pursued in the past. Do they make sense? How does it compare to Diageo’s competitors’ policies? Which competitors would make for the best comparison? (40%) Diageo was formed from the merger of Grand Metropolitan plc and Guinness plc. Before the merge, both companies used little debt (based on the book D/E ratio and net debt to total capital in the table below) to finance themselves which helped them gain and maintain high credit rating (A and AA respectively). After the merge, Diageo wanted to take the same path by maintaining the interest coverage between 5 and 8 (through actions such as new debt issuance, share repurchase programs shown in figure 1) and having EBITDA/Total Debt between 30 and 35 % to avoid potential downgrade. Its market gearing is 25%. Furthermore, its debt's pay-back period (Debt/EBITDA) shows its ability to pay off its incurred debt in a relatively short period of time. Coupled with the high multiple of cash available for interest payments over the years (EBITDA/Interest expense), the probability of a financial distress is low. We know market gearing is equal to debt over enterprise value. Using data from exhibit 4, we find debt level equal to $6.7 billion. Diageo can take on more debt if needed and benefit from the advantages of a high credit rating. This conservative financial policy allows Diageo to get a rating of A+ with the possibility to raise debt readily with lower promise…

(i) Diageo is a well-known British multinational company which was ranked 6th on the list of “Great Place to Work” 2015. Diageo is the largest producer of spirits. With 597 employees in Ireland and more than 33,000 employees worldwide dispersed among different brands. Diageo has many brands involved in the company, such a Smirnoff, Tanqueray, Guinness etc. These brands together make up Diageo, which means there are many different companies involved and many different products and brands. …

supervising the management of the business and reporting to shareholders on their stewardship.” (Financial Reporting Council, UK Corporate Governance Code) Leadership and Board Effectiveness According to the recent annual report, Diageo has been in compliance with The UK Corporate Governance Code which was published by the Financial Reporting Council in September 2014 until 30 June 2016. In this year, Diageo has 13 board members in total and 5 of them are women. Moreover, the number of over 60…

Diageo made 1 entry attempt prior to Rowson’s Reserve. In Diageo’s first attempt to enter the market they had a joint venture with home a company, Radico Khaitan. Unfortunately, Diageo and Radico Khaitan’s partnership was unsuccessful and they were only able to release one whisky, Masterstroke, which was deemed a failure. Judging by the Diageo president’s emphasis of the new taste, packaging and unique synchrony to the Indian palate it is clear that Dieageo’s previous attempt with Masterstroke…

the global leader, Pernod Ricard has to consistently seek progress in all wine and spirits segments or risk being overtaken by competitors. For example, in 2005 after successfully acquiring Allied Domecq, Pernod Ricard became the world’s number 2 in wines and spirits. Most of its brands enjoy a leading position in international markets. The company has adopted a decentralized operational structure to manage its global operations, based on fifteen key brand companies and 75 market companies. 4.…

will be able to compare and contrast the changes we notice in Theo character from this event. The director has incorporated film techniques into this significant event to engage the audience so they can create a first impression of Theo’s character. When Clive Owen first walks into the café the director used the film technique of body language on Theo’s character to create first initial impressions. We see him push through a crowd of crying people, their eyes plastered to the TV mesmerized by…

Kingfisher airline has service tax arrears of Rs60 Cr. By Feb, 2012 Kingfisher has been declared as non-performing asset (NPA) by SBI, Bank of Baroda, PNB, IDBI, Central Bank & BOI. Kingfisher airline has a accumulate debt of Rs8030 Cr. The airline has forced to shut down its operation on 20 Oct, 2012 by the DGCA and suspended its flight certificate. It was because of Kingfisher airline failure to give an effective response to the show –cause notice issued by the DGCA. After withdrawal of both…

An instrumental sartorial force, his Sean John fashion line has received numerous accolades and awards, including the launch of four Sean John fragrances, the first of which quickly became the top-selling fragrance across America. Through a partnership with Diageo, Sean Combs' wildly popular Cîroc Vodka has become the standard for premium vodka, prompting the entrepreneur to acquire luxury tequila brand DE León and launch the fitness and wellness water brand AQUA…

sector, Marico CMD Mr. Harsh Mariwala went niche with the concept of skin care solutions instead of the regular modern retail business. An unconventional step, but a very strategic move. “As there was a lot of interest in retail during that time, we decided to try out niche retail in the area of dermatology as the cost of hiring a dermatologist would be much cheaper in India. After some quick market research, we decided to set up a single incubation cell with a manager who would report to me…

the U.S. and China, the two largest beer markets in the world, owning to antitrust issues. Target also has a partnership with Coca-Cola in Latin America where Anheuser has bottling and distribution deals with PepsiCo, which could be another possibility of a conflict. After the acquisition of Oriental Brewery recently, Anheuser's debt to EBITDA ratio has increased to 2.49 from 2.26 last year. Despite selling of SABMiller's interests in Miller Coors, target's net debt to EBITDA is expected to…