Diageo-controlled United Spirits Limited (USL), India’s biggest liquor firm, has proposed a merger with its majority-owned and listed subsidiary Pioneer Distilleries Limited (PDL).
The maker of Johnie Walker and McDowell whiskey said in a company statement that the amalgamation scheme has been approved at its board meeting.
The scheme now awaits requisite approvals from statutory authorities including Securities Exchange, BSE Limited and National Stock Exchange, respective shareholders and creditors of both the companies.
With the completion of this merger, the non-promoter shareholders of PDL will receive 10 equity shares of USL for every 47 equity shares of PDL, held by them as on the record date.
Post the merger, USL’s issued capital will expand by about 0.1% and Diageo’s revised holding in USL will be 55.18%. UK-based spirits producer Diageo first acquired a controlling stake in USL in 2014.
“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 CFO, Diageo India. He added that this decision will maximize shareholder value for both the companies.
Bengaluru-headquartered USL has recently reported a net profit decline of 13% at Rs 224.6 crore for the second quarter ended September, primarily impacted by slowdown in consumer demand, liquidity challenges in certain markets as well as temporary supply chain disruption in scotch portfolio, notwithstanding a high base.
Source: Economic Times