Diageo-controlled liquor maker United Spirits Ltd (USL) has approved the sale and franchising of selected brands to Singapore-headquartered Inbrew Beverages for a total cash consideration of Rs 820 crore.
"USL and Inbrew have executed definitive agreements for the sale of the entire business undertaking associated with 32 brands, including iconic brands Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label, and Romanov, for a total cash consideration of approximately INR 8,200 million, subject to customary adjustments. "The sale portfolio covers the entire business undertaking associated with the 32 brands set out below, including the related contracts, permits, intellectual property rights, associated employees, and a manufacturing facility," USL said in a regulatory filing on May 27.
In addition to the above, USL and Inbrew have entered into a 5-year franchise arrangement for 11 other brands, including Bagpiper.
"USL has also granted Inbrew a right, subject to certain conditions, to convert the fixed term franchise arrangement into one with perpetual rights to use and/or a call option to acquire the brands at a pre-agreed consideration." "Certain ancillary agreements, including transitional services arrangements, in relation to the sale of the business undertaking and the franchise and option agreements, have been approved to be executed between USL and Inbrew," the filing said.
The company expects to complete the transaction by the end of the quarter ending September 30, 2022.
Hina Nagarajan, Managing Director & CEO of USL, commented: "The transaction reflects the continued evolution of the management of the Popular portfolio since 2016, when the company moved to a franchise model in many states to enable a sharpened focus on ‘Prestige & Above’. This is a significant move to reshape our portfolio in service of our publicly stated mission to deliver sustained double-digit profitable top-line growth. "
"The acquisition of these iconic brands provides Inbrew with a unique platform to extend its ambition of becoming India’s trusted household beverage company." These brands have delighted consumers for generations, and we are excited at the prospect of strengthening this legacy. Inbrew will revitalise these brands through expanded distribution, innovation, and investment. "After the acquisition of Molson Coors’ beer business last year, we will now participate in the mainstream spirits category, making Inbrew India’s diverse AlcoBev player," said Ravi Deol, Chairman of Inbrew.