UK/INDIA: Diageo moves to take United Spirits majority control
If the offer is successful Diageo will secure a 54.78% stake United Spirits
The UK-headquartered firm said today (15 April) it has tabled an offer to United Spirits' public shareholders to acquire up to 37.8m more shares in the unit, a subsidiary of the UB Group. Diageo, through its subsidiary Relay, currently has a 28.78% share in the spirits firm, after upping its stake last year.
If the tender offer is successful, Diageo, through Relay, will have a 54.78% stake in United Spirits, whose brands include McDowell's No.1 Whiskey. Diageo will have paid INR180.2bn (US$3.1bn) in total for its stake in the unit, at a multiple of 38-times United Spirits' EBITDA.
In its last financial year ending in March, United Spirits, which also produces Indian Made Foreign Liquor (IMFL), reported a net loss after tax of INR1.1bn, off the back of sales of INR106bn. EBITDA came in at INR13.5bn.
Vijay Mallya, the UB Group's chairman, denied he had "sold the family silver", when the deal was first announced, but instead argued he had "embellished them (the family silver)".
Shares in United Spirits surged to a record high in Mumbai today, and are currently trading up 11.82% at INR2,859.5.
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