Diageo Set To Take Over Vijay Mallya's United Spirits

[BommakantiNagalingam]

India-born Ivan Menezes, seen to be the next chief executive at Diageo Plc, is leading the drinks giant on its most significant conquest in emerging markets. Menezes, currently chief operating officer, and his battery of dealmakers are set to clinch a long-rumoured takeover of United Spirits Ltd from India's troubled liquor czar Vijay Mallya anytime now.

[b]Diageo, makers of Johnnie Walker scotch whiskey and Smirnoff vodka[/b], will take significant ownership and management rights in USL, a Bangalore-based company with more than 50% share of India's branded liquor sales. Mallya will retain a stake and continue as USL chairman.

Mallya's flagship McDowell's No.1, with retail sales topping $2 billion, is the second largest Indian [url="http://timesofindia.indiatimes.com/topic/Fmcg"]FMCG[/url] trademark after Amul. Diageo has been in protracted talks with USL but negotiations were renewed earlier this year after Mallya's Kingfisher Airlines struggled under mounting debts and losses, which eventually saw the DGCA suspending its flying licence last month. TOI first reported on Diageo re-engaging with Mallya on March 29 this year.

Mallya and Diageo's brass were finalizing the final contours of the deal in London at the time of going to press. Diageo's share purchase will peg the enterprise valuation of USL at about $4 billion. The soon-to-be-announced deal will be a complex affair with Mallya remaining the flagbearer of his brands, for which Diageo might actually pay a hefty annual fee, said a banking source familiar with the matter.