Diageo buys big stake in USL

Drinks behemoth Diageo is to spend over one billion pounds taking a majority stake in Indian spirits firm USL.

The firm will initially pay 660 million pounds for a 27.4% stake in USL, the biggest spirits company in India.

This deal will trigger an obligation on Diageo to launch a mandatory tender offer to the public shareholders of USL.

Consequently Diageo has also announced that it will launch a tender offer to acquire a maximum of 37,785,214 shares, which equates to 26% of USL's shares.

When the deal is complete Diageo will hold 53.4% of USL at an aggregate cost of around £1.29bn.

Paul S Walsh, Chief Executive of Diageo, said growth in the Indian market was being driven by the increasing number of middle class consumers looking to buy premium and prestige local spirits brands as income levels rise.

"The combination of USL's strong business with the capabilities which Diageo brings as the world's leading premium drinks company will ensure that USL continues to lead the industry in India," he said.

MM