Diageo rebuffs USL open offer claims

Diageo has stated there was “no change” in the control of United Spirits (USL) when former chairman Vijay Mallya resigned, hitting out at claims that it may need to offer shareholders the option to buy stock.

Vijay Mallya eventually stepped down as USL chairman in February 2016

According to the Economic Times, The Securities and Exchange Board of India (Sebi) says USL ownership changed when Mallya stepped down – a move which, under Indian law, means shareholders should be given the right to purchase stock at rates lower than the market value.

However a Diageo spokesperson told The Spirits Business: “It is clear that Diageo has been in control of USL since July 2013. We are therefore very clear that there was no change of control in February 2016.”

Diageo officially gained a majority shareholding in USL in July 2014 in a US$1.3bn deal that saw it take control of a 55% stake.

Mallya received a US$75 million severance package from Diageo when he agreed to resign from his roles as United Spirits chairman and non-executive director in February 2016.

Diageo argues that his departure did not affect the control of the company given that it already held a majority stake.

The Spirits Business understands that Sebi has given Diageo three weeks to respond to its “communication of findings”.