Herbert Smith Freehills is advising United Breweries (Holdings) Limited, (UBHL) on the sale of a 19.3% interest in United Spirit’s Limited’s (USL) share capital, to Diageo plc (Diageo), which was announced on 9 November 2012. The Herbert Smith Freehills team worked very closely with a team led by Cyril Shroff and Nivedita Rao of Amarchand and Mangaldas & Suresh A. Shroff & Co.
USL is the leading spirits company in India and the world’s largest spirits company by volume. Diageo’s acquisition and related arrangements will have an aggregate value of approximately £1.285 billion.
The transaction has been structured as a purchase, subject to conditions, of 25.23 million USL shares for approximately £418 million by Diageo from UBHL and a preferential allotment, subject to USL’s shareholders’ approval, to the Diageo group of an additional 14.53 million USL shares for approximately £242 million. This acquisition and preferential allotment will trigger a mandatory tender offer in India for an additional 26% of the post-issue share capital for additional consideration of approximately £625 million.
The transaction is expected to complete in the first quarter of 2013. Following completion, the UBHL group will retain a 13.4% equity interest in USL and Dr Vijay Mallya (the current Chairman of USL and UBHL) will continue in his role as Chairman of those companies and will work with Diageo to build the USL business in India.
Diageo and Dr Mallya have also entered into a memorandum of understanding (MoU), on which Herbert Smith Freehills has also advised, to establish a joint venture in relation to sorghum beer business in South Africa. In addition, Diageo and Dr Mallya are also considering an extension of the joint venture to other emerging markets in Asia (other than India) and Africa.
The Herbert Smith Freehills team was led by partners Chris Parsons, Alan Montgomery, Clive Barnard, Roddy Martin, Robert Moore and Matthew Job with support from, among others, associates Gavin Williams, Leon Sosnowski, Richard Hollis, Kathryn Cecil and Natsai Gondo.
Alan Montgomery commented: “It was a great honour advising Dr Mallya and UBHL on this exciting transaction and a real pleasure to work side by side with Cyril Shroff and his team at Amarchand. UBHL is another new high profile Indian client of the firm and a testament to the quality of our India practice.”
Diageo is being advised by Slaughter and May and Platinum Partners.
