just Five Years Ago: Diageo eyes stake in United Spirits
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.
However, by September 2011, the UK group confirmed it had pulled out of the partnership, insisting it wanted to “go it alone” in India.
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”.
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.
In the third part of this month's management briefing, Ben Cooper reviews the environmental sustainability of three of the world's biggest brewers: Anheuser-Busch InBev, Carlsberg and Diageo....
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