Relay BV, the Dutch arm of the world's biggest spirits maker Diageo, increased its stake in United Spirits — the flagship company of Vijay Mallya-led UB Group — through an open market transaction on Friday. It purchased 35 lakh shares, or 2.41% stake, in United Spirits through a bulk deal at an average price of R2,474.45 per share. Foillowing this transaction, valued at R866 crore, UK-based Diageo now owns 28.8% in United Spirits. As of December 2013, Relay held 26.37% in United Spirits.
The United Spirits stock closed at R2,474.45, up R33.95, or 1.39%, in Friday's trade.
The open market operation seems to be counterbalancing a sell trade in which Oppenheimer Funds exited 36.42 lakh shares of United Spirits. The fund held 39.68 lakh shares, or 2.73%, in the Indian spirits maker at the end of 2013, exchange data show.
In 2012, Diageo had announced it intends to buy 53.4% stake in United Spirits through promoters and other shareholders, valuing the deal at R11,166.5 crore. However, it could garner only 25.02% for a total consideration of R5,235.85 crore due to a tepid response to its open offer.
However, one of its share purchase transactions, involving the purchase of a 6.98% stake from Mallya’s holding company, United Breweries Holdings (UBHL), was struck down last month by the Karnataka HC while hearing a petition filed against UBHL by its creditors. Diageo’s appeal against Karnataka HC ruling is scheduled to come up for hearing in the Supreme Court on Friday.
Separately, in a conference call addressing analysts after announcing the December quarter numbers, Diageo management said the company is set to consolidate its Indian operations starting the coming fiscal (2014-15).
While acknowledging the deployment of the company's compliance and governance policies, including the rejig of the board of directors of United Spirits, Diageo management said they were planning to appoint a new CEO by April 2014.