Spirits company Diageo to pay $75m to Vijay Mallya after he steps down from United Spirits

 
James Nickerson
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Diageo said India is an exciting growth opportunity (Source: Getty)

Owner of Johnnie Walker Diageo is to pay $75m (£53m) to Vijay Mallya in a deal that will result in the businessman stepping down as chairman of United Spirits.

Mallya, an Indian businessman, sold United Spirits to Diageo in 2012. Diageo paid £1.8bn for a 55 per cent stake in the company.

However, Diageo and Mallya had been unable to resolve a dispute after the board of United Spirits wanted to see him gone, but he refused.

Read more: Diageo sells its last US wine asset

Mallya was the former controlling shareholder.

Diageo wanted to see the back of him after it was forced to hold an emergency meeting in April last year after Mallya was accused of financial misconduct.

Mallya was alleged to have diverted funds from United Spirits to support his loss making Kingfisher Airlines between 2010 and 2012.

Read more: Foreign exchange gives Diageo a hangover

Diageo will pay the $75m to Mallya over the next five years, as it will effectively be breaking the pledge it made when it agreed as part of the purchase to allow Mallya to remain chairman.

Ivan Menezes, Diageo’s chief executive, said "the agreement announced today is in the best interests of both Diageo and USL and allows USL to build on its strong platform in one of the biggest spirits markets in the world".

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