Diageo sets deadline for Royal Challengers Bangalore sale bids
Final bids for Diageo’s controlling stake in Indian Premier League team Royal Challengers Bangalore are due by the end of March, setting up a high-stakes contest between global investors. The sale could fetch up to US$2 billion as several powerful consortia compete for one of cricket’s most valuable franchises.
The Indian Premier League cricket season begins in 10 days’ time but before then a battle that has been playing out for the past three months will come to a crunch.
Diageo has set March 31 as the deadline for final bids for its 65% controlling stake in Royal Challengers Bangalore, a shareholding that came with the 2013 purchase of United Spirits from fugitive tycoon Vijay Mallya.
It regards the franchise as non-core to its drinks interests despite it being a huge advertisement for the Royal Challenge Indian whisky brand.
Strong interest from global investors
The rumour mill in India suggests that at least three consortia are vying for the franchise which has huge brand equity and an enormous global fan base backed by the 2025 title win in a season which saw revenue surge by 73%.
Diageo is said to be looking for $2 billion for its 65% stake in the RCB franchise but market insiders suggest that currently the received binding bids are hovering between $1.5 billion and $1.7 billion.
Initially America’s Glazer family, who control Manchester United, were said to be willing to offer up to $1.8 billion but their interest is said to be cooling as the prospect of a late bidding war emerges.
Key consortia in the running
Late entrants but sudden favourites are a consortium of bidders headed by India’s Aditya Birla, a conglomerate whose interests metals, cement, fashion and retail, financial services, renewables, fibre, textiles, chemicals, real estate, trading, mining and entertainment, and US sports tycoon David Blitzer.
He chairman of the private equity firm Blackstone’s tactical opportunities division and the only person to own team equity in the five major professional sports leagues in America.
Also said to be in the running is a consortium led by Manipal Hospitals’ Dr Ranjan Pai, US private equity firm KKR and Singapore investment group Temasek.
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A third contender could be the combination of Swedish private equity firm EQT and the finance vehicle of Azim Premji, the Indian multi-billionaire.
Conflict rules could complicate bidding
Complicating the picture is the that the Birla Blitzer consortium is already a frontrunner to acquire a majority stake in rival cricket franchise Rajasthan Royals. However Indian Premier League rules on conflicts of interest rules could force the consortium to choose which team to own.
Vijay Mallya rumoured to seek return
And one bizarre report suggests that Mallya is eager to join one of the consortia if they will let him.
He is wanted for trial in India for fraud and money laundering but claims he cannot leave the UK as his passport has been confiscated. He is an avid cricket fan and regularly attends matches involving India at Lord’s or The Oval and regularly posts on social media about RCB successes.
How he would fund a stake is unclear as he has been declared bankrupt in the UK.
Decision expected later this year
Diageo will decide between the offers in April with a final deal being concluded in the autumn.
The potential of a late bidding war could see the drinks giant realise its $2 billion target to add to the $2.3 billion it will reap from the agreed sale of its 65% stake in East African Breweries to Japan’s Asahi.
New chief executive Sir Dave Lewis says he will unveil his strategy for the group, including debt reduction, in May.
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