Diageo not to acquire Montana

Diageo PLC
19 October 2005





                                                                 19 October 2005



Diageo decides not to exercise its option to acquire the Montana wine business



Diageo has informed Pernod Ricard that it has decided not to exercise the option
to purchase the Montana wine business.



In June 2005 Pernod Ricard granted Diageo an exclusive option to purchase
certain assets within the Montana wine business including the Montana brand and
associated assets. At the time the option was granted, Allied Domecq, which was
subsequently acquired by Pernod Ricard in July 2005, owned the Montana business.
The option gave Diageo the opportunity to determine whether the acquisition of
Montana could achieve appropriate growth and returns for shareholders.



The option was granted over the Montana wine business with the exception of the
Corban's, Stoneleigh and Church Road brands. Diageo has now completed a detailed
review of this business and the prospects for export led growth together with
margin improvement from premiumisation and innovation. However, the acquisition
would not meet Diageo's investment criteria.



Paul Walsh, CEO of Diageo commented:



'Diageo gained the option over the Montana wine assets as a result of Pernod's
acquisition of Allied Domecq. We have now examined the opportunities that the
Montana business presents and we have concluded that it does not fit our
investment criteria and have decided not to proceed.



'We recognize that wine is a growing category and that our scale can deliver top
and bottom line synergy benefits for wine acquisitions. We will add selectively
to our wine business, especially within the premium segment, as we have done
with our recent Chalone acquisition. '



                                     -Ends-



Contacts:

Investor Relations:

Catherine James [phone]  [e-mail]

Media Relations:

Isabelle Thomas [phone] [e-mail]





Notes to Editor:



Diageo is the world's leading premium drinks business. With its global vision,
and local marketing focus, Diageo brings to consumers an outstanding collection
of beverage alcohol brands across the spirits, wine and beer categories
including Smirnoff, Guinness, Johnnie Walker, Baileys, J&B, Cuervo, Captain
Morgan and Tanqueray, and Beaulieu Vineyard and Sterling Vineyards wines. Diageo
trades in some 180 countries around the world and is listed on both the New York
Stock Exchange (DEO) and the London Stock Exchange (DGE). For more information
about Diageo, its people, brands and performance, visit us at www.diageo.com






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