India: Diageo to merge with its Pioneer Distilleries subsidiary
Diageos Indian drinks arm, United Spirits, is set to merge with its Pioneer Distilleries subsidiary after the move was approved by the board of directors, The Spirits Business reported on December 3.
Pioneer Distilleries, a listed company that is majority owned by United Spirits Limited (USL), produces alcohol for the company at a distillery in the Nanded District of Maharashtra.
The proposed merger is part of our strategy to consolidate the India business and further simplify the operating structure, which would result in enabling business synergies and efficiencies, said Sanjeev Churiwala, executive director and chief financial officer at USL. We believe this decision will maximise shareholder value for both the companies.
Once the merger is completed, Pioneer Distilleries shareholders will receive 10 equity shares in USL for every 47 equity shares in Pioneer Distilleries. Diageos shareholding in USL will also be revised to 55.18% from 55.2% following the move, which is subject to statutory and shareholder approval.
This summer, Diageo invested US$27.3 million to increase its shareholding in Bangalore-based USL.
According to Diageo, USL is a highly strategic asset that allows the company to capitalise on opportunities within India, one of the most exciting growth markets in the world for total beverage alcohol.
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