Diageo formally gets 10% stake in United Spirits

Diageo, the global spirits major, was on Monday allotted a 10 per cent stake in Vijay Mallya’s United Spirits (USL), the country’s largest in this segment. This was part of an agreement between the two last November.

In turn, Diageo appointed its Asia-Pacific head, Gilbert Ghostine, as an additional director on USL’s board of directors.

USL’s board said they’d approved the allotment of a little over 14.5 million shares to Diageo. As a result, there will be an infusion of close to Rs 2,093 crore into USL. The latter’s management has said a major part of this will be used to pay down its high-cost debt. USL is currently having loan dues of close to Rs 8,500 crore, with a leverage of about 2.5 times.

Prior to the preferential allotment, Diageo had got 0.44 per cent of the total equity through an open offer. After these two steps, UB Holdings, the parent company, along with other Mallya group companies, are to sell part of their holdings in USL, taking Diageo’s stake to 27.4 per cent. This is expected to happen by the end of next month.

Ghostine, the new appointee on the USL board, is also a member of the global executive committee of Diageo. He is responsible for the firm’s businesses in Australasia, Greater China, North Asia, Southeast Asia, India, West Asia, North Africa and global travel. He has been with the company for about 20 years.  His previous roles include managing director, continental Europe; president of US major markets and national accounts; and managing director for eastern/central Europe, Middle East and Africa for Diageo Venture Markets.

On Monday, USL’s share lost 2.15 per cent and closed at Rs 2,512.90 a share on NSE , after having touched a 52-week high of Rs 2,608 a share during the session.