Diageo’s Indian division United Spirits is set to merge with its majority-owned subsidiary Pioneer Distilleries after securing approval by the board of directors.
The move is part of the company’s strategy to simplify its operating structure to enable more efficient business.
As a subsidiary of United Spirits, Pioneer Distilleries manufactures alcohol for the company at a distillery located in the Nanded District of Maharashtra
As part of the amalgamation, non-promoter shareholders of Pioneer Distilleries will receive ten equity shares of United Spirits for every 47 equity shares of Pioneer Distilleries.
Following completion of the merger, United Spirits’ issued capital will expand by around 0.1% and Diageo’s revised holding in its subsidiary will be 55.18%.
Sanjeev Churiwala, chief financial officer of Diageo India, said: “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. We believe this decision will maximise shareholder value for both the companies.”
The amalgamation is subject to the receipt of requisite approvals from statutory authorities including Securities Exchange and Board of India, as well as respective shareholders and creditors of the two companies.
At the beginning of this year, United Spirits sold its wine division Four Seasons Wines in a move to focus on its core brands in the country. This followed Diageo’s announcement of the sale of 19 brands to US firm Sazerac for $550 million, as it aims to focus on growing its premium spirits portfolio.
© FoodBev Media Ltd 2019