Diageo: Has never discussed selling Shui Jing Fang, but will consider if the offer is reasonable.

Whale News, February 26 (Reporter Zhu Xinyue) — Rumors that Diageo, the controlling shareholder of Shui Jing Fang (600779.SH), plans to sell its stake have been ongoing from 2025 and continued to ferment into 2026. The rumors finally received an official response at Diageo’s H1 2026 earnings conference.

Diageo management explicitly stated that the group has never discussed selling Shui Jing Fang, and all related news are market speculation.

It is also worth noting that Diageo has some flexibility. They said, “The group will not sell its brands below fair value. If a third party makes an irresistible offer outside our strategic plans for assets, as a rational company, we will certainly listen and engage.”

This statement also implies that, as long as the offer meets expectations, the sale of Shui Jing Fang’s equity is not impossible.

What the market is more concerned about is, if a deal is initiated, what would be Diageo’s expected bid for this stake?

To clarify this, we first need to calculate Diageo’s total acquisition cost for Shui Jing Fang.

From 2006 to 2019, Diageo gradually gained control of Shui Jing Fang through multiple rounds of equity acquisitions. In 2006, it purchased 43% of Shui Jing Fang’s then controlling shareholder, Quingxing Group, for 517 million yuan; in 2008, it increased its stake by 6%, reaching 49%. According to Yicai, this increase cost 140 million yuan; in 2011, it further increased by 4% to 53%, with the transaction valued at 140 million pounds (about 1.4 billion yuan).

After this increase, Diageo, holding 53% of Quingxing Group, indirectly controlled about 39.71% of Shui Jing Fang, officially becoming its actual controller. This also triggered a mandatory tender offer. Subsequently, Diageo made a full tender offer to all Shui Jing Fang shareholders outside Quingxing Group at 21.45 yuan per share. The offer was only accepted for 3,154 shares, totaling 68,000 yuan. In 2013, Diageo completed the acquisition of the remaining 47% of Quingxing Group for 233 million pounds (~2.2 billion yuan).

Between 2018 and 2019, to further consolidate control, Diageo launched two additional tender offers, acquiring shares at 61.38 yuan and 45 yuan per share, costing approximately 6.084 billion yuan and 690 million yuan respectively. After these transactions, Diageo’s stake in Shui Jing Fang increased to 63.14%.

Based on these figures, the total acquisition cost for Diageo’s Shui Jing Fang holdings has reached hundreds of millions of yuan.

Shen Meng, Director of Sang Sang Capital, told Whale News that for Diageo, Shui Jing Fang is not impossible to sell, but they would neither sell at original price nor sell at a loss. The minimum price for selling Shui Jing Fang’s controlling stake should be the higher of the combined value of the equity market value plus control premium, initial acquisition cost, and the capital’s time cost.

“But whether this price can find a buyer in the short term is still uncertain. It’s likely that Diageo is not in a hurry to sell at this stage,” Shen Meng added.