United Spirits shareholders give nod to Diageo deal
Deck has been cleared for British liquor maker Diageo to merge the businesses of its India unit and its subsidiary United Spirits Ltd (USL).business Updated: Jan 12, 2015 01:41 IST
Deck has been cleared for British liquor maker Diageo to merge the businesses of its India unit and its subsidiary United Spirits Ltd (USL).
Minority shareholders of USL favoured the resolution to “make, sell and distribute” its parent Diageo’s products in an extraordinary general meeting held on Friday, the company informed the exchanges on Saturday.
Two months ago, the shareholders had rejected the resolution for want of clarity. “Shareholders have found this deal is a value accretive for USL and supported it,” Anand Kripalu, MD and CEO, United Spirits, told Hindustan Times.
Diageo gained complete control over USL’s operation when its protracted takeover bid successfully ended with acquiring an additional 26% through an open offer in July 2014, which saw its stake jump up to 54.78%. Vijay Mallya, who continues to be non-executive chairman, holds less than 2% share after selling off majority stakeholding.
“Diageo has made an investment of $3 billion in India through USL to transform its business in the country. This gives us an opportunity to have one portfolio of brands supported by one team,” Kripalu said.
Diageo’s 15 brands, including premium products Smirnoff vodka and Johnnie Walker whiskey, will become part of USL’s portfolio of 150 brands.
“The intent is to integrate portfolio of brands, manufacturing units and people, while Diageo India will continue as a shell company,” Kripalu said. “This gives us an opportunity to transform the reputation of our company and liquor industry in India through a comprehensive corporate citizenship programme.”
When asked if Diageo would initiate a brand overhaul that involves rechristening USL to Diageo India, Kripalu said: “There is no decision taken on that. Right now it remains United Spirits”. He said the integration of two businesses has started with the shareholders’ approval while the process would take a few months to complete.