Diageo agrees to acquire majority stake United Spirits

Diageo agrees to acquire majority stake United Spirits British spirits group Diageo Plc has agreed to acquire a majority stake Vijay Mallya-promoted United Spirits Ltd for $2.1 billion (Rs 11,166.5 crore).

Initially, Diageo will acquire a 27.4 per cent stake in United Spirits, plus subscribe to new shares to be issued by the company at Rs 1,440 apiece. Subsequently, the British firm will acquire an additional 26 per cent stake by buying share from public shareholders at the same price. Finally, it will acquire a 53.4 per cent stake in Indian liquor giant United Spirits.

According to the deal, Mallya will continue as the chairman of United Spirits, and United Breweries will hold 14.9 per cent of the existing share capital in United Spirits following the completion of the deal.

The new acquisition will allow the world's biggest spirits group to stretch its feet into one of the world's fastest-growing liquor markets. Diageo pockets around 40 per cent of its total revenues from emerging markets and aims to hike the figure to 50 per cent by the year of 2015. It owns brands like Smirnoff vodka, Tanqueray gin and Bailey's liquer.

Commenting on the deal, Mallya said, "I am happy that the dream has come true. United Spirits will receive a large cash infusion."

The deal will definitely help cash-strapped Mallya gain the much-required cash to slash the debt pile of United Spirits and free up some funds to restore the group's stranded Kingfisher Airlines.