Diageo is expected to finally take majority control of United Spirits

Diageo is expected to finally take majority control of United Spirits

Diageo is hoping to confirm early next month that it has secured majority control of India's United Spirits after it has verified the amount of public shares it has acquired from a second open offer. 

The deadline for the offer passed yesterday (19 June) in which the London-headquartered group was looking to acquire up to 37.8m more shares in the firm. If the take-up and acceptance of shares is agreed, Diageo will have a 54.78% stake in India's largest spirits company. 

The Smirnoff producer is currently in the process of scrutinising and vertifying the shares that have been tendered, just-drinks understands. A final announcement is expected in “early July” on how many shares have been secured, a source close to the situation said. 

Diageo will have paid INR180.2bn (US$3.1bn) in total for its stake in the firm, at a multiple of 38-times United Spirits' EBITDA.

Diageo became the biggest shareholder in United Spirits last July, when it upped its stake to 25% through a share purchase agreement, after an initial deal was struck in November 2012. The latest tender offer opened on 6 June. 

If Diageo gains majority control, it will bring to an end a lengthy episode involving the firm's efforts to gain a significant stake in United Spirits, a subsidiary of the Vijay Mallaya-controlled UB Group. The UK firm is keen to exploit United Spirits' domination of alcohol distribution in the emerging market of India. 

Earlier this week, United Spirits said it was delaying the reporting of its full-year results due to problems with debtors and an outstanding loan

Shares in United Spirits are currently trading up 4.39% at INR2,702.95 on the Bombay Stock Exchange

Expert analysis

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