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Diageo strikes £1.2bn deal with United Spirits
Diageo has agreed to buy a 53.4% stake in United Spirits in a £1.2bn deal.
Vijay Mallya will stay on as chairman of United Spirits
The deal brings to a close months of rumours, which started when Vijay Mallya’s business first hit financial problems.
Diageo has initially agreed to purchase a 27.4% stake in United Spirits, at a price of 1,440 Indian rupees per share. This will cost the British drinks giant £660m.
Diageo will then launch a mandatory open offer for an additional 26% from public shareholders at the same price, giving it a 53.4% majority stake in United Spirits.
Paul Walsh, chief executive of Diageo, said: “I am delighted at the opportunity Diageo has to be part of India’s large and growing local spirits market. As a result of the agreements we are announcing today we will be well positioned to take the growth opportunities presented by a spirits market where growth is driven by the increasing number of middle class consumers.
“The combination of United Spirits’ strong business with the capabilities which Diageo brings as the world’s leading premium drinks company will ensure that USL continues to lead the industry in India.
Dr Mallya will continue in his current role as chairman of United Spirits and United Breweries.
Dr Mallya said: “I am very proud of United Spirits and what has been created over the last 30 years to bring this company to its pre-eminent position in India.
“I have had a long association with Diageo and therefore I am confident that this winning partnership with Diageo provides United Spirits with the best possible platform for future growth.”