Vijay distances Kingfisher Airlines from United Spirits sale

Victoria
By Victoria November 9, 2012 23:08

Vijay distances Kingfisher Airlines from United Spirits sale

“Each individual company is a public entity. Kingfisher Airlines’ issues will be resolved by Kingfisher Airlines and UB Holdings. It would be unfortunate if you try to link this transaction with the airline. Let’s not cross contaminate everything and interrelate everything.” That was how Vijay Mallya made it clear that the money was not destined to airline creditors after announcing the deal to sell his United Spirits stake to Diageo. This, just three days after SBI had said the Kingfisher Airlines would have to get capital by the end of this month.
Diageo has agreed to buy a majority stake in United Spirits Ltd, for $2.1bn / Rs 11,000 crore in a cash and debt deal that will see it end up with 53.4% of United Spirits. Diageo, in the end, was willing to pay a heavy price for United Spirits – But given the condition of Vijay’s empire the question for many is why pay this premium – Some 7% on the close last week? That is not a question for this site, intriguing though it is.
Most reading this would have thought that the deal would pay off USL debts and inject funds into Kingfisher Airlines, we here thought Vijay would walk away from his crumbling empire with what cash he could and so this seems to be coming to pass.
Vijay Mallya will stay on as chairman of United Spirits while Diageo will name the top executive team. UBHL will keep 14.9 percent of the company.
Diageo will acquire 27.4% of United Spirits from its founders and a packet of new shares for 1,440 rupees – a premium of around 7% to Thursday’s close.
Diageo will then launch a mandatory offer for another 26% on the open market. If it fails to buy outright control, UBHL would vote with Diageo on decisions for four years. UBHL has an option to sell its remaining shares to Diageo from the end of the first full year of control for seven years.
Diageo said it had also agreed to a request from Vijay Mallya to form a joint venture to run a sorghum beer business in South Africa which it said would help it build its presence in another market with a growing drinking class.

Victoria
By Victoria November 9, 2012 23:08
Write a comment

No Comments

No Comments Yet!

Let me tell You a sad story ! There are no comments yet, but You can be first one to comment this article.

Write a comment

Only <a href="http://www.aviationnews-online.com/wp-login.php?redirect_to=http%3A%2F%2Fwww.aviationnews-online.com%2Fairline%2Fvijay-distances-kingfisher-airlines-from-united-spirits-sale%2F"> registered </a> users can comment.