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United Spirits signs sale, franchise agreements for select brands with Inbrew

The move follows a strategic review of USL’s selected popular brands announced on February 23, 2021, it said, adding, the transaction does not include the McDowell’s or Director’s Special brands, which will be retained by USL.

USL has granted Inbrew a right, subject to conditions, to convert the fixed term franchise arrangement into one with perpetual rights to use or a call option to acquire the brands at a pre-agreed consideration.

The board of United Spirits’ (USL), in which UK-based Diageo holds a stake, on Friday approved the sale and franchising of its certain popular brands to Inbrew Beverages for Rs 820 crore in a cash deal.

USL and Inbrew have executed definitive agreements for the sale of the entire business undertaking associated with 32 brands, including iconic brands such as Haywards, Old Tavern, White-Mischief, Honey Bee, Green Label and Romanov. The deal is subject to customary adjustments, USL said in a late night announcement on BSE.

The move follows a strategic review of USL’s selected popular brands announced on February 23, 2021, it said, adding, the transaction does not include the McDowell’s or Director’s Special brands, which will be retained by USL.

The sale portfolio covers the entire business undertaking associated with the 32 brands, including the related contracts, permits, intellectual property rights, associated employees, and a manufacturing facility. In addition, USL and Inbrew have entered into a five-year franchise arrangement for 11 other brands, including Bagpiper.

USL has also granted Inbrew a right, subject to conditions, to convert the fixed term franchise arrangement into one with perpetual rights to use or a call option to acquire the brands at a pre-agreed consideration.

“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 topline growth,” USL Managing Director and Chief Executive Officer of USL said.

Inbrew Chairman Ravi Deol said: “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 over generations, and we are excited at the prospect of strengthening this legacy. Inbrew will revitalise these brands through expanded distribution, innovation and investments”.

Pending the resolution of the ongoing dispute and the release of the existing encumbrance over the franchised brands, the legal title to the franchised brands remains with USL. The company expects to complete the transaction by the quarter ending September 30, 2022.

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