On July 4, 2013, the Diageo Group, a British multinational
alcohol beverages group completed acquisition of approx. 25.02% of
shares of United Spirits Limited, a listed Indian company. The deal
valued at about INR 52 Billion eventually was one of the largest
transactions especially in the food and beverages industry, not
just in India but across the world. The deal was also a landmark in
many ways as it prompted certain changes to the M&A regulations
The deal gave the Diageo Group a much anticipated entry into one
of the world's fastest growing liquor market (India). It also
saw the maker of leading and marquee global brands such as
Smirnoff, Johnnie Walker, Bailey and Guinness, extend its holding
to brands such as Black Dog, Bagpiper and McDowell's.
The consummation of the deal was not without its fair share of
challenges. The deal was subjected to a detailed scrutiny by the
Securities and Exchange Board of India as well as the Competition
Commission of India. Apart from the regulatory scrutiny, the deal
was also challenged before the Courts by the lenders of the Sellers
(especially the Promoter Group).
The deal has been much in discussions, not only because of the
legal, regulatory and commercial issues involved, but also due to
the high profile promoter, Dr. Vijay Mallya, who many speculated
was sanctioning the sale to ease the rising debt in both United
Spirits Limited and Kingfisher Airlines.
For Diageo Group, the deal represents their first step towards
consolidating their ever expanding hold in one of the fastest
growing spirits market in the world. For Dr. Vijay Mallya and the
UB Group, the deal represents a new partnership with an experienced
global player and reduction of their (respective) debt. For United
Spirits Limited, it represents the best of both worlds as an
established local presence meets international governance and
operational standards and also deleverages itself. Having said
that, time will tell whether Diageo will do justice to the
'King of Good Times' going ahead.
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