Shares in Diageo were up on the FTSE 100 in morning trading after the beverage company said it would be acquiring Turkish spirits company Mey Icki for £1.3 billion.

Diageo will be acquiring the company from investment firm TPG Capital in a deal which is expected to be completed in the second half of 2011.

Mey Icki is the market leader for a drink known as Raki in Turkey and also has a large market share for vodka in the country. Last year the company reported net sales of £300 million.

Diageo said it would be bringing Mey Icki into its European operations and that funding for the acquisition would come from a mixture of cash reserves and debt.

Paul Walsh, CEO of Diageo, said, "Turkey is an attractive, growing market for Diageo with strong GDP growth. The acquisition of Mey Içki transforms our existing position in this fast growing spirits market. It gives us leading brands in the major local spirits categories, a superior distribution network and a proven management team. The acquisition of Mey Içki will also provide Diageo with an outstanding platform from which to accelerate the long term growth of our premium international spirits brands in Turkey.

"The acquisition meets our return criterion and delivers top line growth above the Diageo average, and margin expansion. I am delighted to welcome the Mey Içki brands and management team to Diageo.

"This investment represents the continuation of our strategy to increase Diageo's presence in those emerging markets, such as China and Vietnam, which have a rapidly growing middle class."

By 11:00 shares in Diageo were up 0.17 per cent on the FTSE 100 to 1,202.00.