Diageo on-track with United Spirits take-over
Despite failing in its in bid to buy 26% of United Spirits on the Indian stock exchange, Diageo are on track to gain control of the world’s biggest distiller.
The company’s price of 1,440 rupees (£17) a share has been on the table since 10 April, but with United Spirits shares trading at a near record high of 2000 rupees plus, there has been little interest in the offer, which closes on 26 April.
Diageo’s share offer was a mandatory part of the £1.28bn deal announced last November, which includes buying 27.4% of the business from Vijay Mallya – the Indian tycoon whose Kingfisher airlines is reportedly US$2.5bn in debt.
Although this leaves the UK spirits giant a minority shareholder on paper, Diageo will have effective control of the business with the power to appoint the board and make all decisions.
A source high up in the company told The Spirits Business the deal should hopefully complete by the end of June. The source described the sum paid by Diageo as relatively small compared to the potentially ‘monumental rewards’.
United Spirits boasts a portfolio of 22 ‘millionaire’ brands and claims a 55% share of all Indian-made foreign liquor (IMFL).
“With IMFL you’re talking of 250m cases and United Spirits has 126m of that market – so this is massive,” said Gilbert Ghostine, president of Diageo Asia Pacific. “United Spirits will give us an unbeatable platform for our imported brands.”
For more on this story see the May issue of The Spirits Business magazine.