Diageo to acquire 53.4 % in United Spirits for Rs11,165 crore

Vijay Mallya, the self-professed King of Good Times, has finally sold a majority stake in United Spirits Ltd (USL), the flagship company of the United Breweries (UB) Group, to Diageo Plc, the world's largest spirits maker in a complex Rs11,165 crore ($2.05 billion) deal.

Listed on both the New York and the London Stock Exchange Diageo, which holds 25 per cent of the world's premium liquor market, will acquire a 53.4-per cent stake in Bangalore-based USL in a two stage deal.

Diageo will buy a 19.3-stake in United Spirits for Rs1,440 ($26.5) per share from the UB Group, the USL Benefit Trust, Palmer Investment Group Ltd, and UB Sports Management (both subsidiaries of USL) and SWEW Benefit Company (a company established for the benefit of certain USL employees).

Following the sale, UB group would continue to hold 14.9 per cent stake in USL.

Shareholders of USL will then approve the preferential allotment of new shares to Diageo at Rs1,440 per share amounting to 10 per cent of the post-issue enlarged share capital of USL.

These purchases will automatically force Diageo to launch a mandatory tender offer under the Indian takeover rules, and the owner of premium liquor brands such as Crown Royal, Smirnoff and Guinness, will launch a tender offer to acquire 26 per cent stake of the enlarged share capital of USL at Rs1,440 per share.