Diageo Secures Position in India through Control over United Spirits

By IVCPOST Staff Reporter

Jul 05, 2013 01:57 AM EDT

Diageo bought shares from United Spirits and at the same time, also acquired 14.98% of shares from a firm owned by Vijay Mallya for US$521 million. All these acquisitions gave Diageo a total of 25.02% control over United Spirits Ltd, enough to make it the leading and largest company in the whisky market.

Diageo as well as Pernod Ricard SA are both planning to expand in emerging markets, where imminent growth is anticipated. Population belonging to the middle class having increased consumption power can be observed in these markets. Expansion is a lucrative option. 

As early as 2009, Diageo had been negotiating with Mallya on this deal; however, the deal did not come into fruition when United Spirits perceived the offered price too low. This current acquisition is a turning point for Diageo's position in India, enabling it to take advantage of more opportunities in the emerging market.

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