The board of directors of United Spirits (USL), in which UK-based Diageo has a stake, approved the sale and franchising of certain popular brands to Inbrew Beverages for Rs 820 crore in cash on Friday.
USL and Inbrew have agreed to sell the entire business undertaking associated with 32 brands, which include iconic brands such as Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label, and Romanov. The transaction is subject to customary adjustments, according to a late-night announcement on the BSE by USL.
The sale portfolio includes the entire business venture associated with the 32 brands, such as contracts, permits, intellectual property rights, associated employees, and a manufacturing facility. Furthermore, USL and Inbrew have agreed to a five-year franchise agreement for 11 additional brands, including Bagpiper.
USL has also granted Inbrew the right, subject to certain conditions, to convert the fixed-term franchise agreement into one with perpetual rights to use or a call option to acquire the brands for a pre-agreed-upon sum.
The transaction reflects the ongoing evolution of the popular portfolio’s management since 2016 when the company moved to a franchise model in many states to enable a sharper focus on ‘Prestige & Above.’ This is a significant move to reshape our portfolio in support of their publicly stated mission of delivering double-digit profitable topline growth for the long term.
With the acquisition of these iconic brands, Inbrew gains a unique platform to further its goal of becoming India’s trusted household beverage company. These brands have delighted customers for generations, and they are thrilled at the prospect of building on that legacy. These brands will be revitalized by Inbrew through expanded distribution, innovation, and investments.
The legal title to the franchised brands remains with USL pending the settlement of the ongoing dispute and the release of the existing encumbrance over the franchised brands. The transaction is expected to be completed by the end of the fiscal quarter ending September 30, 2022.
United Spirits Limited (USL) is an Indian alcoholic beverage corporation and the world’s second-largest spirits organization by volume. It is a Diageo subsidiary with headquarters at UB Tower in Bangalore, Karnataka. USL exports to more than 37 countries.
According to the company’s official website, as of March 2013, USL had more than 140 liquor brands, with 15 brands selling more than one million cases per year and three brands selling more than ten million cases per year.