Surge in United Spirits' share price adds 85 mn pounds to Diageo

By May 2013, Diageo picked up 10% equity interest through a preferential allotment of shares by United Spirits

The sharp increase in the share price of United Spirits' from the Rs 1,440 per share at which Diageo picked up a 25.02% in Mallya-led United Spirits, has led to an 85 million pounds addition to exceptional income in the books of Diageo. 

 

Diageo, which closes its accounting year by June 30, has said that by that date of 2013, the share price of USL was at Rs 2,168 per share and thus it (Diageo) saw a 85 million pounds gain on the re-measurement of the investment to fair value. "The gain was recognised in other comprehensive income in the year ended 30 June 2013," Diageo said in a statement. 

 

By end of May 2013, Diageo picked up 10% equity interest through a preferential allotment of shares by United Spirits Rs 2,009 crore at Rs 1,440 per share. Prior to that, Diageo acquired a 0.04% equity interest on the closing of a mandatory tender offer to the other USL shareholders at a cost of 1 million pounds. The directly attributable transaction costs of £33 million were included within the initial investment cost.

 

Post these two steps, United Spirits during early July 2013, completed the share sale agreement towards Diageo, subsequent to which Diageo's total stake went upto 25.02%.  Diageo has stated that they will be consolidating USL's numbers into its global balance sheet with effect from January 2014.