Diageo overtakes USL

United Spirits Limited (USL), India’s largest alcoholic beverage manufacturer which was formerly owned by Vijay Mallya's UB Group has been acquired by Diageo and has increased its stake in USL to 54.8 percent from 28.8 percent earlier.

Last year, after buying 25.04 percent in USL, which triggered the mandatory open offer, Diageo saw just 0.4 percent of USL shareholders tender in their shares. This time around, the tender offer was oversubscribed with close to Rs 7 crore shares being tendered in the offer with an acceptance ratio of close to 55 percent. Diageo expects to fully consolidate the results of USL from 2^nd July 2014.

Ivan Menezes, The India-born CEO of Diageo, said, “India has now become one of Diageo's largest markets and will be a major contributor to our growth ambitions. USL is the leading player in the attractive Indian spirits market with great brands, a unique route to consumer and talented people.”

However, Vijay Mallya continues to hold close to 7 percent stake in the company through various investment arms of his UB Group. In 2012, Diageo and Mallya struck a shareholder's agreement (SHA) by which all of Mallya's investment arms in USL would vote in favour of Diageo. Though this SHA has lost its significance now in the wake of Diageo crossing the 50 percent stake threshold, the SHA has not been dissolved.

USL has 21 brands in its portfolio that sell more than a million cases each year, of which five brands each sell more than 10 million cases annually.