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After protracted discussions, Vijay Mallya finally decided on a transaction in which Diageo will get 53.4 per cent stake in his UB Group's flagship, United Spirits. In a discussion with the Indian media from London, he detailed how this was done. Edited excerpts:
You had said you would not be forced to sell family silver but, at the end, you have.
It is not selling family silver; I am embellishing it.
I continue to be chairman of the company and my promoter-led companies will hold 14.9 per cent stake.
I have taken this step in the best interest of United Spirits.
I had, in 2009, brought in Heineken as an equal shareholder in my beer business - United Breweries - and it has since built significant shareholder value.
We have come into a significant partnership with Diageo and it is a dream combination, win-win for both.
I am delighted about it and it is beneficial to the UB Group. If you think I have sold out control in United Spirits and moved on, it is not true.
Diageo will get to benefit immensely from acquiring the majority in United Spirits, as they get to ride on its entrenched network in India. You have also been looking for a while to take USL brands global; how will Diageo's global presence work in your favour?
We will surely work on it. We have a strong emerging markets team in United Spirits and as part of this deal with Diageo, we intend to push that further.
I have entered into a memorandum of understanding with Diageo under which a 50:50 joint venture (JV) will own United National Breweries' traditional sorghum beer business in South Africa.
Diageo's investment for its 50 per cent interest in the JV is expected to be $36 million, subject to adjustment.
We are also considering the possibility of extending this to maximise the opportunities which exist in certain emerging markets in Africa and Asia, excluding India.
How do you intend to expand the scope of Diageo's brands in India, given that their presence is marginal in the Indian context?
I will now happily embrace the Diageo portfolio of brands and make sure sales and marketing leadership is attained in India.
I will undertake a whole range of initiatives to drive the portfolio, along with USL brands.