Drinks giant Diageo has sold the the luxury hotel and golf resort Gleneagles to a private investment company, to alleviate struggles the group is currently undergoing.
The five-star resort, which in 2014 played host to the Ryder Cup golf tournament, was sold to Ennismore, a UK-based private investment company that currently operates The Hoxton hotels, a chain of boutique resorts in the UK and Europe. Although no fee has been disclosed, it is said to be near the £200 million mark that Diageo proposed when it was placed on the market. A bid said to be in the region of £160 million was made in May by British firm Ralph Trustees.
The new owner has pledged to "invest significantly in the resort while retaining the existing staff. "We plan to operate Gleneagles as a standalone business, alongside The Hoxton, to ensure that its management team can preserve the special appeal of this Scottish landmark," said chief executive Sharan Pasricha.
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According to the Financial Times, the sale will "temporarily relieve the burden" on Diageo's chief executive Ivan Menezes, who is under pressure due to recent poor performance by the company.
The resort was reportedly becoming a distraction for Diageo, as its investors are keen to focus on the key aspects of the business, i.e. drinks, and particularly to improve performance in emerging markets. Diageo's sales have remained largely stagnant over the last seven quarters.
The producer of Guinness, Smirnoff vodka and Johnnie Walker whisky is exploring options to boost profits, including selling off its wine division. Recently rumours of a takeover by 3G Capital sent share price soaring, only later to be reported as false.
Diageo has owned Gleneagles since 1984 and made a previous attempt to sell in 1984, which was later aborted. Menezes said that after the Ryder Cup the timing was appropriate to test the market and focus on the company's key brands.
"I am pleased that Diageo's brands, especially our scotch brands, will continue to be an important feature at this iconic Scottish hotel," said Menezes.