DIAGEO PLC ADRs $123 - New York symbol DEO

DIAGEO PLC ADRs $123 (New York symbol DEO; Conservative Growth Portfolio, Consumer sector; ADRs outstanding: 627.6 million; Market cap: $77.2 billion; Price-to-sales ratio: 4.6; Dividend yield: 1.8%; TSINetwork Rating: Above Average; www.diageo.com) has raised its stake in United Spirits, India’s largest distiller, from 10.04% to 25.02%. Diageo is now United Spirits’ largest shareholder. It also controls the company through voting agreements with other major shareholders.

Diageo paid 594.4 million British pounds for this additional stake (1 British pound = $1.58 Canadian). To put that in context, the company earned 1.5 billion pounds, or 2.44 pounds per ADR, in the six months ended December 31, 2012. (Each American Depositary Receipt represents four Diageo common shares.)

The purchase will help Diageo profit from rising demand for premium spirits in India. However, it will take at least a year before the new operations add to the company’s earnings.

Diageo is a hold.

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