Diageo buys majority stake in India's United Spirits

[bifter]

UK drinks giant Diageo is buying a majority stake in India's United Spirits group for £1.28bn ($2.04bn).

Diageo, whose brands include Johnnie Walker, Guinness and Smirnoff, will get a 53.4% share in Indian liquor baron Vijay Mallya's United Spirits.

The UK firm is upping its stake in India's growing drinks market.

The deal will help Mr Mallya reduce United Spirits' debts and free up funds for his embattled Kingfisher Airline.

The two companies announced in September that they were in talks.

Diageo and United Spirits initially started negotiations in 2008, but talks broke down the following year.

Diageo is initially buying a 27.4% stake for £660m in United Spirits, whose brands include Whyte & Mackay Scotch whisky.

The UK firm will then launch a mandatory offer for a further 26% stake in the Indian group.

Cash injection

In a press release, Paul Walsh, Diageo chief executive, said: "I am delighted at the opportunity Diageo has to be part of India's large and growing local spirits market.

"As a result of the agreements we are announcing today we will be well positioned to take the growth opportunities presented by a spirits market where growth is driven by the increasing number of middle class consumers."

Under the terms of the deal, Mr Mallya, the man behind Force India Formula One team and the troubled carrier Kingfisher Airline, will remain as chairman of United Spirits (USL) and United Breweries, which makes Kingfisher beer.

"I have had a long association with Diageo and therefore I am confident that this winning partnership with Diageo provides USL with the best possible platform for future growth," he said.

There has long been speculation that Mr Mallya would sell part of his stake in either United Spirits or United Breweries to raise money for his airline, whose planes remain grounded.

"Some of the Mallya group companies have been in turbulence for some time," said Jagannadham Thunuguntla of SMC Investments and Advisors Ltd in New Delhi.

"This is his final opportunity to revive the fortune of the group."

The purchase is the biggest inbound Indian mergers and acquisitions deal since the British oil firm Cairn Energy sold a majority stake in its Indian business to Vedanta Resources last year.

This deal by Diageo follows its takeovers of the Turkish spirits group Mey Icki and the Ethiopian brewer Meta Abo.

Source: BBC
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"Whisky is liquid sunshine."
[George Bernard Shaw]

[William]

I got a press release from Diageo about this earlier today. I will try find some time this evening to add it to the site. Diageo have been after this for some time as the Indian drinks market is huge.

I wonder what is going to happen to the Whyte & Mackay brands now, will there be an antitrust/competition law issue.
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There's no bad whisky. Just good whisky and better whisky.

[William]

I did get around to adding a piece last night about Diageo taking a 27% shareholding In United Spirits including some interesting facts and figures about the massive Indian market and United Spirits key brands in India.

For example how many of you have heard of these Indian whiskies:

McDowell No. 1 family is the largest spirits brand in the world with sales over 44 million 9-litre cases in FY 2012 in 3 variants (whisky, brandy and rum).

Signature (# 2 fastest growing premium whisky in India).

Royal Challenge (# 3 fastest growing premium whisky in India).

Antiquity (# 4 fastest growing premium whisky in India).

Bagpiper (# 1 fastest growing regular whisky in India)

Director's Special Whisky.

Or have you heard of the Black Dog Scotch blended whisky, Black Dog 12 year old is the # 1 fastest growing premium Scotch and Black Dog 8 year old is the fastest growing regular Scotch in India.

More info here:
www.scotchmaltwhisky.co.uk/diageounitedspiritsdeal.htm
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There's no bad whisky. Just good whisky and better whisky.

[Quaich1]

[Frankie]

I have never even heard of Black Dog yet it is a Scotch blended whisky, cheers for the link Quaich1

[albo]

Black dog is new to me too!

[John]

I am pretty sure Black Dog is only available in India, they produce it and blend it in Scotland and i am pretty sure they ship it to India to be bottled at least they used to do it that way.

Never had the chance to taste it or even set eyes on a bottles but apparently it is considered a premium blend in India and Jim Murray rates the Black Dog 12 year old pretty highly, he scored it 92/100

[albo]

I'd be very interested in trying that then.

Not sure if I'll get over to India in much of a hurry mind

[Quaich1]

The only Indian whisky I have is an unopened bottle of Amrut Fusion single malt, 50%abv. from Bangalore, India. Jim Murray rates it very high.
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"Always carry a large flagon of whisky in case of snakebite and furthermore always carry a small snake."
W.C. Fields (1880-1946)

[Crane]