FDBusiness.com

Diageo has agreed to acquire a 27.4% stake in United Spirits Limited (USL), the leading spirits company in India for INR57.3 billion (£660 million) from United Breweries (Holdings) Ltd. Diageo will also now launch a mandatory tender offer to the public shareholders of USL to acquire further shares, equating to 26% of the enlarged share capital of USL. If the tender offer is fully subscribed, Diageo will hold 53.4% of the enlarged USL share capital at an aggregate cost of INR 111,665 million (approximately £1.285 billion). This represents a 20x multiple of USL’s EBITDA for the year ended 31 March 2012.

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

Paul Walsh, chief executive of Diageo, comments: “USL’s number one position in local spirits together with our growing international spirits business of leading brands will enable us to grow across the consumer space as India’s increasing number of middle class consumers look to enjoy premium and prestige local spirits brands as income levels rise. The combination of USL’s strong business with the capabilities which Diageo brings as the world’s leading premium drinks company will ensure that USL continues to lead the industry in India.”

He adds: “The acquisition of our shareholding in USL is fully aligned with our strategy to build our presence in the world’s faster growing markets and enhances our position as the world’s leading premium drinks company.”