Diageo's United Spirits goes back to shareholders for distribution deal approval
United Spirits will hold an EGM for shareholders on 9 January
In a filing yesterday, the Indian firm, which is majority-owned by Diageo, said it will hold an extraordinary general meeting on 9 January for shareholders to vote on the measure. Last month, 70% of United Spirits' shareholders voted for the plans in a postal ballot, but this fell short of the 75% needed for the resolution to pass.
Diageo said at the time that it was “surprised and disappointed” at the result of the vote.
In order to argue how producing and selling Diageo's brands in India will benefit the company, United Spirits provided some detail in the filing. It flagged that the agreements would add around INR7bn (US$130m) in sales in the first full-year, compared to around INR420m of revenue from the current “promotion services agreement” it has with Diageo's Indian unit.
Diageo previously said that distribution of its brands would “improve the company’s standing in the domestic market (India) by virtue of leveraging the Diageo brand and marketing capabilities”.
The Smirnoff producer took majority control of United Spirits in July, gaining a 55% stake in the company.
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