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United Spirits: “We knew it would be complicated” - Diageo CEO

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The head of Diageo has admitted that his company's eventual purchase of majority control of India's United Spirits had given the firm its fair share of headaches.

Diageo finally secured majority control of United Spirits earlier this year

Diageo finally secured majority control of United Spirits earlier this year

In late-2012, Diageo announced its intention to buy 53.4% of United Spirits for US$2.05bn. The purchase of an initial 27.4% was followed almost two years later by the acquisition of a further 26%.

Since securing the deal, Diageo has seen United Spirits' shareholders reject its proposal to distribute its products in the country – although approval was finally secured at the start of this year – while the division's board called for chairman Vijay Mallya to stand down in April following an internal audit review.

Speaking at a media roundtable in London today, following the release of full-year results this morning, CEO Ivan Menezes admitted the move had not been plain-sailing. "We knew it would be complicated," he said. "We knew it wouldn't be straightforward, but I couldn't be happier to have the position we have now.

"It (United Spirits) is a fantastic asset – it's going to be one of the game-changing elements for Diageo over the next ten years."

On the USL board's request for Mallya to step down, Menezes said: "The USL board has had a process in place – it's following through, so it would be inappropriate to comment further at this time."

Menezes declined to give a time-frame for a resolution to the matter.

When asked if Diageo would look to raise its stakeholding, Menezes said: "We wanted to get the controlling interest. Could we take a bit more over time? Yes, but we'll keep the company listed. We have no intention to take it 100% owned."

In the group's full-year results today, its India operations reported a 3% lift in net sales with volumes rising by 5%.


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