MUMBAI: United SpiritsBSE -2.18 % on Monday said its board has approved the sale of 14.5 million shares, or 10% stake, at Rs 1,440 apiece to Relay BV, a wholly-owned arm of Diageo Plc, on a preferential basis for Rs 2,092 crore.

The move comes two days after the Karnataka High Court ordered United Breweries HoldingsBSE 3.56 %, the holding company of the UB group, to sell 16.7 million shares, or 12 % stake, of United Spirits to Diageo at Rs 1,440 per share.

The sale sets the stage for Diageo to take a controlling stake in United Spirits, India’s largest spirits company and the owners of brands such as Bagpiper, McDowell and Antiquity. But the final contours of the relationship between Diageo and the UB group, led by chairman Vijay Mallya, will still have to be worked out following the failure of Diageo’s open offer.

Diageo agreed to buy a controlling stake in United Spirits last week in a three-stage transaction. USL would make a preferential allotment of 10% along with 5% treasury stake held by various UB trusts. UB Holdings, the group holding company, and other firms controlled by promoter Vijay Mallya will also sell 12% to Diageo, giving the British liquor giant a 27.4% stake in the company. Diageo was to separately make an open offer to the public to purchase 20% at Rs 1,440 per share.

But the failure of the open offer means that Diageo will be left with only 27.4% and not the nearly 50% that it hoped for. This is likely to give the UB group some advantage as Diageo will rely on the Bangalore-based group for support in pushing through key resolutions. The shareholders agreement signed between the two in November last year already provides for the UB group to vote along with Diageo on key board decisions for four years.

For more visit: Economic times

Similar Posts:

• United Spirits jumps 35% on Stake sale to Diageo
• Mallya cashes in on share rally in United Breweries Holding
• United Spirits close to 49% stake sale in Whyte & Mackay
• Mallya plans to sell 49% stake in Whyte & Mackay
• United Spirits merges Balaji Distilleries with itself, stock up 1.3%