DIAGEO INVESTS IN UNITED SPIRITS
After several years of rumors, drinks company Diageo has agreed to buy up to 53.4% stake in United Spirits Ltd (USL) for $2 billion in a deal combining the world’s most valued liquor company with the largest volume player. This move makes Diageo the new master of India’s booming liquor market with more than 5O% share. India, one of the fastest growing geographies for alcoholic beverages, also becomes Diageo’s second largest market after the US. The British company, however, deemed the acquisition as a partnership with Vijay Mallya to make the latter’s “incredibly strong” liquor empire more successful. Mallya will remain chairman. United Breweries Holdings Ltd will own a 14.9% stake at the end of the transaction.
Diageo and Mallya also entered into a separate agreement to float an equal South African JV, after the former decided to take a 5O% stake in the privately held United National Breweries of the Indian liquor czar. This could become a broader vehicle to expand Mallya’s interests into other emerging markets.