Kingfisher Airlines chief Vijay Mallya tried his best to defend his sale of a major stake in United Spirits, however his trump card business is no longer in his hands. The world’s largest liquor company Diageo Plc agreed to buy a 53.4 percent stake in United Spirits on November 9, 2012, for Rs. 11,166 crores in a two-legged deal.
Mallya however, saw the deal as a win-win situation. The Kingfisher chief insisted, “I have not sold the family jewel, only embellished it. This deal is not a sellout, that is just India media’s perception and I can’t help that. Diageo wanted to consolidate its position in emerging markets.” Mallya added that this deal is just an appreciation of Diageo’s needs and has been done in order to help them consolidate their position in the market.
Vijay Mallya might sound quite generous, but the fact remains that the liquor company now no longer belongs to him. Even if Diageo had ended up with less than a 50.1% stake, UB’s holdings would have to vote in favor of all resolutions proposed by the company for the next four years. Diageo owns brands such as Johnnie Walker, Smirnoff and J&B.
In simple words, Diageo is now the boss and Mallya is just a namesake figurehead chairman of the company. United Spirits currently has a debt of Rs. 8,300 crore.