Shareholders approve Diageo India merger with United Spirits

United Spirits Ltd (BSE: USL) this Saturday announced that the company has acquired a majority of their minority shareholders for an exclusive license and distribution agreement with its parent company, Diageo. The proposal, which was challenged and defeated in the October last year, will now allow the USL to sell and manufacture the products of Diageo subsidiary.

According the reports, the USL received a majority of 76.33% from its minority shareholders where the remaining 23.67% opposed it the same way they did 45 days ago. The polling was done through an e-portal, and the special resolution received nearly 11 million votes in favor and 3.5 million against it.

As per the official sources, the United Breweries, which holds 2.90% of the USL, and Kingfisher Finvest that has nearly 1.14 percent of the shares, also went along with the resolution.

If we talk about the loss, the company has incurred in the year 2014. In Q2 and Q3, the company faced a net profit/(loss) of ₹ (55.56) crores and ₹ (27.83) crores respectively. The company issued a financial report reflecting all the loss it went through in the fiscal year 2014 and 2013.


However, with this new resolution to sell Diageo products, which includes Johnnie Walker, Smirnoff and VAT 69, the company is expected to add a revenue of ₹700 crores to the USL financial reports in the first full year. It has also been reported the estimation of EBIT (Earning Before Interest and Taxes) is likely to have a hike of ₹70 crores, which is currently only ₹16 crores.

Diageo is among the top companies in this world, and the local arm of this British drinks company registered a revenue of ₹683 crores in the year that ended in March 2014. Currently, Diageo holds a stake of 54.78% in the USL and with the transfer of these exclusive contracts to the USL, the Diageo will not have any operations.

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