World’s leading spirits company Diageo Plc today acquired an additional 14.98 per cent in Vijay Mallya-owned United Spirits (USL) for Rs 3,134.5 crore. With this, Diageo could acquire only 25 per cent stake in United Spirits against the target of 53.4 per cent.
The 14.98-per cent stake was bought at at Rs 1,440 a share. The company’s shares today closed at Rs 2,556.25.
Diageo had earlier picked a 10 per cent stake in United Spirits and another lot of 58,668 shares, taking its total stake in United Spirits to 25.02 per cent.
Shares owned by the USL Benefit Trust, which represents 2.38 per cent of the enlarged issued share capital of USL, could not be acquired as certain lenders refused to release the 34.59 lakh shares they hold. If the release of all security interests over these shares is obtained, they will be purchased separately at a later stage, Diageo said in a statement.
‘Breach of contract’
Reacting to the lenders’ stand, United Spirits said: “USL believes that this refusal is in clear breach of the applicable contractual arrangements. Accordingly, USL and the trustees of the USL Benefit Trust are taking steps to expedite release of the security to enable the balance of the sale under the Share Purchase Agreement to Diageo Bidco to take effect as soon as practicable.”
With the latest acquisition of shares, Diageo will now be able to fully reflect the results of USL in its consolidated accounts from January 1, 2014.
Vijay Mallya will continue as non-executive director and chairman of United Spirits, and Ashok Capoor the CEO.
Diageo has nominated Gilbert Ghostine and Ravi Rajagopal as non-executive directors of USL. In addition, Diageo Bidco has confirmed P. A. Murali as Chief Financial Officer and nominated him as an executive director. The others named as additional non-executive directors are Arun Gandhi, Sudhakar Rao, D. Sivanandhan and Renu Karnad.
giriprakash.k@thehindu.co.in