Diageo to acquire 53.4% stake in Mallya’s United Spirits

Mangalore Today/ CNN-IBN

New Delhi, Nov 9: Diageo plc would acquire a 27.4 per cent stake in United Spirits, the leading spirits company in India, for Rs. 5,725.4 crore, the company said in a statement.

Diageo will acquire a 19.3 per cent interest in United Spirits at a price of Rs. 1,440 per share from the UB Holdings and a number of other groups related to the UB group.  Following this disposal, the UBHL group would continue to have a shareholding in USL amounting to 14.9 per cent of current share capital.

 

 

Diageo will also seek approval for preferential allotment at Rs. 1,440 per share of new shares amounting to 10 per cent of the post-issue enlarged share capital of United Spirits.

"Following completion of these agreements, Dr Vijay Mallya will continue in his current role as chairman of USL, and UBHL and Dr Mallya will work with Diageo to build the USL business as the current consumer trends for premiumisation accelerate in India," the statement said.

Once Diageo gets 27.4 per cent stake, it will launch the mandatory offer to acquire 26 per cent shares of United Spirits at Rs. 1,440 per share. Post the mandatory offer, Diageo will hold 53.4 per cent of the enlarged USL share capital at an aggregate cost of Rs. 11,166.5 crore.

"This represents a 20-times multiple of USL’s EBITDA for the year ended 31 March 2012 and the transaction would be eps accretive in year 2 and economic profit positive in year 6 assuming a 12 % WACC," the statement said.