United Spirits To Acquire 15% Stake in Pistola for ₹5.65 Crore

On April 4, 2024, United Spirits Limited informed the stock exchanges that the company’s board had approved the investment in Inspired Hospitality Private Limited (Pistola).

Details of the Investment

On Thursday, United Spirits Limited’s board approved the investment in Inspired Hospitality Private Limited, Pistola, by subscribing to 3,494 Compulsory Convertible Preference Shares (CCPS) and 10 equity shares of Pistola, equivalent to 15.0% of its issued and paid-up share capital on a fully diluted basis for an aggregate consideration of ₹5.65 crore.

The acquisition is expected to be completed on or before June 30, 2024, with cash consideration as the mode of payment.

United Spirits Limited stated that further, upon Pistola achieving certain pre-agreed milestones within a defined time period, the definitive agreements provide for an option on the part of the company to acquire remaining shares held by other shareholders at a pre-determined valuation methodology.

Pistola is an alcoholic beverage company that develops, markets and sells agave spirits. With this investment, the company seeks to strengthen its position in the premium craft segment with an Indian provenance, which has been witnessing good traction among Indian consumers.

Pistola reported a revenue of ₹3.03 crore in FY 2023 and ₹0.27 crore in FY 2022. They mentioned that approximately 90% of its revenues are from India. Additionally, Pistola’s products are available in 3 countries, including the USA, Singapore and Thailand.

Regarding the significant terms of the agreement, United Spirits stated in the filing that the company has various customary protection rights under the Share Subscription and Shareholder Agreement (SSHA), including the right to currently appoint one director to the board of Pistola, a list of reserved matters in relation to Pistola which require the affirmative approval of the Company, pre-emptive and first rights in connection with future issuances of shares, exit rights upon the occurrence of an event of default, etc.

The company also has rights of first refusal, tag-along and drag-along in connection with any proposal by the Pistola Promoters to transfer shares in Pistola to a third party. The Pistola Promoters have a right of first offer in case of any proposal by the company to transfer shares in Pistola to a third party.

On April 5, 2024, the United Spirits share price opened at ₹1,120.05, touching the day’s high at ₹1,130.85, as of 1:53 PM on the NSE.

About United Spirits Limited

United Spirits Ltd (USL) is the leading beverage alcohol company in India and a subsidiary of global leader Diageo PLC. The company manufactures, sells, and distributes a wide range of premium brands, including Johnnie Walker, Black & White, Black Dog, Antiquity, VAT 69, Royal Challenge, Smirnoff, etc.

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