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Drinks giant Diageo has ditched its play for Swedish vodka brand Absolut in favour of Dutch rival Ketel One.

Following its agreement to pay $900 million (£460 million) for a 50 per cent stake in Ketel One, Diageo is to set up a new company with the Nolet family, which will control the vodka brand. The deal is expected to complete by 31 March.

Diageo will fully consolidate the financial results of the new company, accounting for the Nolet holding as a minority interest. The Nolet family will continue to own the brand rights for Ketel One and Diageo will become the exclusive distributor of the brand globally. Profits from the sales, marketing and distribution operations will be shared broadly equally.

Ketel One vodka is manufactured at a distillery owned by the Nolet family in Scheidam Holland and cites an annual volume of 1.9 million cases. As a North American brand in the super-premium vodka segment, it is expected to complement Diageo’s premium Smirnoff and its ultra-premium Cîroc brands as well as providing Diageo with an opportunity to expand its brand range in vodka outside of the US.

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