Diageo plc said it had completed the acquisition of a further 14.98 per cent stake in United Spirits Ltd. (USL), thus taking its total holding in USL to 25.2 per cent for a total cost of Rs.5,236 crore (about #594,429,632).

As per the initial agreement signed in November 2012, Diageo had to acquire 53 per cent in USL. But it could not achieve the target as its open offer to acquire 26 per cent of USL shares at Rs.1,440 per share evoked lukewarm response, and the company could acquire only 58,668 shares for Rs.8.57 crore.

Banks also refused to release USL shares pledged by the UB group towards Kingfisher’s loan which could have been transferred to Diageo. Diageo was to acquire 27 per cent stake directly from the UB group.

On May 27, Diageo had subscribed for a preferential allotment of new shares in USL amounting to 10 per cent of the post-issue enlarged share capital for Rs.2,092.7 crore.

Shares owned by the USL Benefit Trust (pledged with banks), which were part of the original transaction and which represented 2.38 per cent of the enlarged issued share capital of USL, were not part of the sale and purchase announced on Thursday, Diageo said.

If these shares would be released, then Diageo would purchase them separately at a later stage.

Diageo said it would now integrate USL with itself by implementing its operational and governance standards at USL.

“Having completed the share purchase, we will now begin the work to identify and capture the significant growth opportunities within this (India) attractive market,” Ivan Menezes, Chief Executive of Diageo, said.

“I am very pleased that we have completed our share purchase agreement today [Thursday]. USL has entered the next stage on its journey, and I look forward to remaining part of that journey in my role as Chairman of USL,” Vijay Mallya, Chairman, UB Group, said.

Mallya will continue as non-executive director and chairman of USL. Ashok Capoor will continue as CEO of USL.

Following the preferential allotment, Diageo Bidco nominated Gilbert Ghostine as a non-executive director of USL. Diageo Bidco is entitled to appoint its nominees to the roles of CEO, CFO and the head of internal audit.

More In: Industry | Business