Disposal

Diageo PLC
27 February 2002

                                                      Wednesday 27 February 2002


 Diageo announces sale of Malibu and supply agreement with Destileria Serralles

Diageo today announces that it has reached agreement to sell its Malibu brand to
Allied Domecq. It has also established a contract for the supply of Puerto Rican
rum for Captain Morgan through a new supply agreement between its Joseph E.
Seagram subsidiary and Destileria Serralles.

Destileria Serralles and Allied Domecq have agreed to dismiss the litigation
Destileria Serralles is pursuing with regard to Captain Morgan with effect from
the closing of Allied Domecq's purchase of Malibu.

Under the agreement Diageo will receive £560 million from Allied Domecq for
Malibu. Diageo has also agreed to transfer the Mumm Cuvee Napa sparkling wine
business to Allied Domecq for £27.5 million. Allied Domecq already owns the Mumm
champagne business.

Under the terms of the agreements for the acquisition of Seagram, Diageo will
also receive $75 million from Vivendi Universal on completion of the Malibu
disposal and dismissal of the litigation over Captain Morgan.

The divestiture of Malibu is subject to approval by the United States Federal
Trade Commission and clearance by competition regulators in other jurisdictions.
The Malibu sale is expected to complete when the necessary regulatory clearances
and approvals are obtained.

The Malibu sale is not conditional on closing of the disposal of Mumm Cuvee
Napa. The Mumm Cuvee Napa sale also is subject to regulatory clearance in
various jurisdictions.

In the year ended 30 June 2001 Malibu made a contribution after advertising and
marketing of £43.5 million. Mumm Cuvee Napa made a contribution of £3 million.

Diageo previously transferred the Mumm Sekt business to Rotkaeppchen
Sektkellerei GmbH & Co KG in a separate transaction.

Commenting on this news, Paul Walsh, Diageo's chief executive, said:

'These transactions effect the sale of Malibu, confirm Diageo's ownership of
Captain Morgan and secure its long-term rum supply. The disposal is the last of
the significant transactions that result from our acquisition of the Seagram
Spirits & Wines businesses.

'Today we move to the next stage in Diageo's premium drinks journey. Through the
Seagram transaction we have added to Diageo's family outstanding businesses like
Captain Morgan, Crown Royal and Sterling Vineyards. Each of these already has an
excellent track record. Now we are adding the potential for further growth
through innovation, especially in ready to drink. As we demonstrated with our
interim results last week Diageo's focus on premium drinks is delivering strong
performance and momentum.'

                                     -ends-

For more information contact:

Investor enquiries to:  Catherine James          [phone]
                                                [e-mail]

Media enquiries to:     Kathryn Partridge        [phone]
                                                [e-mail]


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