at a price of Rs 1,440 per share.
"On completion of the share purchases as described above and in the event that the tender offer were fully subscribed, Diageo will hold 53.4 per cent of the enlarged USL share capital at an aggregate cost of Rs 11,166.5 crore," the company said.
Commenting on the acquisition, Diageo Chief Operating Officer Ivan M Menezes said: "India will become Diageo's second biggest market after the US. India has the potential to become the largest market in the long term."
Talking about the initial receivables, Mallya said USL will get Rs 3,300 crore, while Rs 2,400 crore will go to UBHL's account.
When asked about the debt position, he said: "At present, USL has a debt of about Rs 8,300 crore. The money, which will come into USL, will primarily be used to reduce debt."
Asked if this deal will affect USL's Whyte & Mackay in anyway, Mallya replied in negative and said it will not be treated separately.
On its need to acquire a stake in an India entity, Menezes said: "We are entering into a partnership today. Our aim is to consolidate USL into Diageo... We hold stakes in local companies and that is the strategy in India as well."
Following completion of these agreements, Mallya will continue in his current role as Chairman of USL, and UBHL and he will work with Diageo to build the USL business as the current consumer trends for premiumisation grow in India. Commenting on the deal, Diageo Plc Chief Executive Paul S Walsh said: "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."
Citi Group was the lead financial adviser to United Breweries (Holdings) Ltd and United Spirits Ltd.
Meanwhile, Diageo and Mallya also inked a pact to form a 50:50 joint venture which will own United National Breweries' traditional sorghum beer business in South Africa.
Diageo's investment for its 50 per cent interest in the joint venture is expected to be around USD 36 million, the joint statement said.
"Diageo and Mallya are also considering the possibility of extending this joint venture in order to maximise opportunities which exist in certain emerging markets in Africa and Asia (excluding India)," the companies said.
For the year ended 2011, Diageo's revenues stood at 13.3 billion pounds and its net income stood at 2.01 billion pounds.