Scottish-headquartered drinks giant Diageo has taken control of long-term takeover target United Spirits Limited after completing a £1.1 billion shares buy-up.
The move opens up the enormous and potentially lucrative Indian market to Diageo and its portfolio of leading spirits brands including Johnnie Walker and Smirnoff.
Edinburgh-based Diageo first took an interest in USL in late 2012 when it bought up more than a quarter of the firm’s share capital.
It then effectively took charge of the Bangalore-based producer which was owned by flamboyant businessman, politician and F1 racing team owner Dr Vijay Mallya through the establishment of a voting agreement with other major shareholders.
However, Diageo moved to take majority control of the business in April this year when it confirmed a tender offer to acquire a further 26% of USL’s stock.
The firm which is represented on the USL board by former chief executive officer Paul Walsh yesterday confirmed it had snapped up 37.7 million shares in USL for approximately £29.60 each, an outlay of £1.11bn.
Diageo said the new options, which have been obtained through its Dutch-registered wholly-owned subsidiary Relay BV, took its overall holdings in the business to 54.87% for which it had paid a total consideration of £1.84bn.
The shareholdings were fully consolidated yesterday, handing Diageo majority ownership of USL for the first time.
“Our announcement today is significant for Diageo,” group chief executive Ivan Menezes said.
The USL business is the largest alcobev company in India and owns a portfolio of more than 140 brands, shipping more than 123 million cases in the year to March 2013.
The firm has manufacturing and bottling plants in every Indian state. It claims a market share of 59% for its first-line brands in the Indian marketplace, and has more than 20 brands selling in excess of a million cases a year.
Outside its homeland, USL exports to 37 countries worldwide and has a strong presence in the Far East and Africa both target growth markets for its new owner.
However, Mr Menezes said the penetration into the Indian marketplace was key. “India has now become one of Diageo’s largest markets and will be a major contributor to our growth ambitions,” he said.
“USL is the leading player in the attractive Indian spirits market with great brands, a unique route to consumer and talented people.
“We can now combine that strong platform with Diageo’s strengths to create a compelling future in India for Diageo, USL and the Indian spirits industry.”
In April, the Scotch Whisky Association highlighted India as one of the star export performers for Scotch last year alongside the US, Mexico, Brazil and Poland.
Whisky exports totalled £4.3bn during the year with India accounting for £68.7m of sales, a figure that had risen 11.5% on the £61.6m of 2012.
Shares in Diageo closed the day 5.50p down at 1,897p yesterday.