Drinks group Diageo has agreed the $552 million (€483m) sale of its major wine interests to Treasury Wine Estates, it said on Wednesday, as part of its drive to shed non-core assets.

It said the deal is for its US-based Chateau and Estate Wines and the British-based Percy Fox businesses.

Diageo plans to use net proceeds of about £320 million after tax and transaction costs to repay borrowings.

The deal, which is subject to regulatory approval, is expected to complete around the end of the calendar year.

For Diageo, maker of Smirnoff vodka, Guinness and Johnny Walker whiskey, the sale is part of a broad shakeup under chief executive Ivan Menezes, who last week said the firm was selling stakes in two beer brewers to Heineken for $780.5 million while buying a 20 per cent stake in Guinness Ghana Breweries from Heineken.

Treasury , the world’s biggest standalone wine maker, announced a fully underwritten rights issue to raise around A$486 million ($350 million) to fund the acquisition. It said it expects to grow pre-tax earnings by up to 29 per cent in the year to June 30th 2016, due to strong first quarter sales.

The company said the purchase of brands including Sterling Vineyards, Yellow Tail, Blossom Hill and Piat d’Or as well as the Chateaux & Estate Wine business in the US would immediately double its luxury and “masstige” - or mass prestige - net sales revenue in that country.

Reuters