Diageo gets United Spirits Limited shock

Move to sell its brands in India fail to get required vote

Hyderabad: India’s largest liquor firm United Spirits Ltd (USL) has failed to secu-re required shareholder’s support to manufacture and sell brands owned by its majority shareholder Diageo.In its filing with Bombay Stock Exchange, USL said that a special resolution seeking shareholders’ approval for a licensing proposal of Diageo “has not been approved by the members with requisite majority”.

While 70.2 per cent of shareholders, who have voted through postal ballot and e-voting, have approved, 29.2 per cent shareholders rejected the proposal.The special resolution failed to get adopted as it requires 75 per cent of shareholders’ consent. Since it was a related party transaction, promoters Diageo and Vijay Mallya’s UB Group have abstained from the vote. Diageo and UB Group together own around 60 per cent of United Spirits shares.

An official of USL called the result surprising and disappointing and said that the special resolution could not be adopted as it fell short of just 4.8 per cent yes vote. USL is now controlled by world’s largest spirits maker Diageo. Shareholders at the November 28 EGM have also not rejected pacts dated September 30, 2011 and December 22, 2011 between USL and and UBHL that required UBHL to sell to the firm certain immovable properties, a BSE filing said.

Other resolutions that were defeated with requisite majority include approval of a services agreement dated July 3 2013 between USL and Kingfisher Finvest India, approval of a sponsorship pact dated June 11 2013 between USL and United Racing & Bloodstock Breeders, approval of a sponsorship pact between USL and United Mohun Bagan Football Team.
Some resolutions had to get shareholders’ nod with new norms on related-party transactions coming to effect.

With 127 shareholders attending the EGM and participating in polling, this could suggest institutional shareholders played an active role in rejecting some resolutions. There was some dra-ma at EGM as five of the promoter firms UB Holdings, Kingfisher Finvest India, Devi Invest-ments, Rossi and Associates and Vittal Investments exercised their votes in favour of a couple of resolutions at EGM. The scrutiniser, however, invalidated the votes exercised by them.
The company said it will examine the validity of the votes exercised by these entities.

( Source : dc correspondent with agency inputs )
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