UK drinks company Diageo, which produces well-known brands including Johnnie Walker, Guinness and Smirnoff, is buying a 53.4% stake in India's United Spirits for £1.28bn.
The deal is expected to help Vijay Mallya, the owner of the Indian group, to reduce the company’s debt and free up funds to rescue Kingfisher Airline, whose planes are currently grounded.
This morning, shares of United Spirits were growing at 27% to a 52-week high.
Negotiations have been held since 2008. Diageo will initially buy a minority stake of 27.4% for £660m.
When the acquisition is complete, India will become the UK drinks giant’s second largest market after the United States.
Diageo’s CEO Paul Walsh said: ” As a result of the agreements we will be well positioned to take the growth opportunities presented by a spirits market where growth is driven by the increasing number of middle class consumers.”
Mr Mallya, who will retain his role as chairman of United Spirits and United Breweries, commented: “I have had a long association with Diageo and therefore I am confident that this winning partnership with Diageo provides USL with the best possible platform for future growth.”