Diageo buys stake in United Spirits

City A.M. Reporter
Diageo announced today it would acquire a 53.4 per cent share of Indian United Spirits for around $2.1bn (£1.32bn).

The purchase, which concludes an on-again, off-again courtship that began in 2008, would be the biggest inbound Indian M&A deal since British oil firm Cairn Energy sold a majority stake in its Indian business to Vedanta Resources last year.

Diageo will initially acquire a 27.4 per cent stake from the founders of United Spirits, and subscribe to new shares to be issued by the firm at 1,440 rupees (£16.54) apiece.

Diageo will then launch a mandatory open offer for an additional 26 per cent from public shareholders at the same price, giving it a majority stake in United Spirits, Diageo said in a statement on Friday.

Subsidiary United Breweries will retain 14.9 per cent of the share capital of United Spirits. Indian liquor baron Vijay Mallya will maintain his position as chairman of United Spirits.

Diageo, which makes Johnnie Walker whisky, Guinness beer and Smirnoff vodka, failed to make a deal with United Spirits in 2008.

Now the company hopes to gain traction in the growing South East Asia brewing market, after Heineken won control of Asia Pacific Breweries in October.