Diageo acquires fresh 26% stake in USL, gains control

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Diageo, the world’s largest liquor maker, has acquired an additional 26 per cent stake in United Spirits, becoming the largest shareholder of the Vijay Mallya-led UB group’s flagship company.

The UK-based company on Wednesday confirmed the successful completion of the £1.1 billion open offer, which was fully accepted by the shareholders. Diageo had initially offered to buy the USL shares at Rs 1,440 apiece, but the offer received tepid response from public shareholders. While the company had made the offer for 3.8 crore shares, shareholders tendered only 64,169 and eventually sold only 58,688.

The company subsequently revised the open offer to Rs 3,030 per share on April 15. The offer closed on June 19. The company paid Rs 11,449 crore to acquire the additional stake. On Wednesday, USL shares closed at Rs 2,486 in Mumbai trading, up 2.9 per cent.

Diageo in a statement said through its wholly-owned subsidiary Relay, it has accepted the tender of 37,785,214 shares in USL. The shares tendered and accepted by Diageo are in the process of being transferred to Relay and represent 26 per cent of USL’s issued share capital, it added.

“Diageo, therefore, will have a total interest of 54.78 per cent in USL acquired for a total consideration of Rs 18,023.14 crore,” it added.

Diageo chief executive Ivan Menezes said: “India has now become one of Diageo’s largest markets and will be a major contributor to our growth. USL is a leading player in the attractive Indian spirits market with great brands and has a unique route to consumers and talented people.”

“We can now combine that strong platform with Diageo’s strengths to create a compelling future in India for Diageo, USL and the Indian spirits sector,” he added.

In November 2012, Diageo bought a 27.4 per cent stake in United Spirits by acquiring shares directly from the promoter entities of the UB group and partly by way of subscribing to a preferential share issue of USL. It triggered a mandatory open offer to acquire an additional 26 per cent stake under the Sebi takeover norms.

United Spirits is the largest alcoholic beverages company in India, having sold 123.70 million cases in the year ended March 31.

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