USL share purchase complete, Diageo musters just 25.02%

UK liquor major Diageo Plc said on Thursday that it has completed the acquisition of an additional 14.98 per cent stake in Vijay Mallya-led United Spirits Limited at a price of Rs 1,440 per share. The deal involved an investment of Rs 3,135 crore, the company said in a statement.

Diageo had last year announced that it would pick up 53.4 per cent stake in USL in a multi-structured deal for a total of Rs 11,166.5 crore. Instead, it now has 25.02 per cent stake in USL for a total consideration of Rs 5,235.85 crore.

On May 27, Diageo had subscribed for a preferential allotment of shares in USL amounting to 10 per cent of the post-issue enlarged share capital at a total consideration of 2,092.71 crore. Separately, Diageo acquired 58,668 additional USL shares for Rs 8.57 crore. “Diageo therefore now holds 36,359,192 shares representing 25.02 per cent of the enlarged USL share capital at an aggregate cost of Rs 5,235.85 crore,” Diageo said.

This represents a multiple of 18 times USL’s EBITDA for the year ended 31 March 2013.
UB Group Chairman Vijay Mallya noted that USL has entered the next stage of its journey. Diageo Chief Executive Ivan Menezes said, “Since we received approval for this transaction we have been getting ready for closing and integration. Having completed the share purchase, we will now begin the work to identify and capture the significant growth opportunities within this attractive market.’

Shares owned by the USL Benefit Trust which were part of the original transaction announced on November 9 last year and which represent 2.38 per cent of the enlarged issued share capital of USL were not part of the sale announced on Friday. “If the release of all security interests over these shares is obtained they will be purchased separately at a later stage,” Menezes said.

With the completion of the share purchase agreement, the shareholders' agreement between Diageo, United Breweries (Holdings) Ltd and KFinvest is now effective.