Diageo became the majority shareholder in United Spirits earlier this year

Diageo became the majority shareholder in United Spirits earlier this year

Five years ago this week talk of Diageo taking a stake in United Spirits first emerged. It set in train a series of events that this year saw the Smirnoff producer secure control of the Indian spirits firm. 

Back in October 2008, both companies were being circumspect about the prospect of a potential relationship. “We are friends with Diageo and we keep talking about matters of mutual interest,” Dr Vijay Mallya, chairman of United Spirits’ parent company, UB Group, said at the time.  

A few weeks later and it appeared the groups had reached second base in their blossoming romance. United Spirits confirmed it had begun “exploratory” and “exclusive” discussions with Diageo

Once the honeymoon period was over, things appeared to cool. Three months later Diageo CEO’s Paul Walsh would merely say the negotiations were “very preliminary”.  

By March 2009, Chang beer owner ThaiBev appeared to be muscling in on proceedings

And, by August, Diageo and United Spirits confirmed that talks had collapsed without a deal.

Diageo then turned its affections to another Indian firm it already had a relationship with - Radico Khaitain - as it looked like it might take control of the JV

However, by September 2011, the UK group confirmed it had pulled out of the partnership, insisting it wanted to “go it alone” in India.

It was not until April last year that talk of Diageo taking a stake in United Spirits reignited. Five months later and the reported negotiations were confirmed.

Just a few weeks passed though before Dr Mallya appeared to be playing hard to get

But, finally, in November last year, the deadlock was broken. A deal was announced that Diageo had agreed to take an initial 27.4% stake in United Spirits, followed by a mandatory tender offer for another 26% chunk. 

Mallya was forced to deny he had “sold the family silver”.

The deal faced some delays, with Diageo gaining an initial 10% stake in May this year

By July, the group had effectively taken control, having upped its stake to 25%

It still remains to be seen what will become of United Spirits’ Scotch whisky unit, Whyte & Mackay. The UK’s Office of Fair Trading is examining the UK whisky market in light of Whyte & Mackay effectively getting new owners in the form of Diageo. A decision is due next month.