Diageo toasts success as it pours out £1.3bn to buy India’s United Spirits

The drinks giant Diageo has finally agreed to acquire a controlling stake in United Spirits for nearly £1.3bn, growing its presence in India massively and ending months of speculation.

Diageo, the maker of Johnnie Walker scotch, plans to acquire 53.4 per cent of United Spirits to give it control of the Vladivar vodka and Whyte & Mackay whisky brands.

The London-based company has long courted United Spirits, and chief executive Paul Walsh hailed the opportunity to be part of "India's large and growing local spirits market". With a population of 1.2 billion, India has a fast-growing middle class of 120 million and the country's spirit market is gaining 4.3 million consumers a year.

The deal could provide some financial relief for United Spirits' boss Vijay Mallya to help him mitigate the cash crisis at United Breweries' sister company, the troubled Kingfisher airline. The Indian tycoon, famous for his bling and publicity shots with glamorous women, will remain chairman of United Spirits.

Diageo has initially agreed to pay £660m for a 27.4 per cent stake in United Spirits and will now put its mandatory offer to buy a further 26 per cent to the Indian firm's shareholders for a total of £1.29bn. It will also have a joint venture with Mr Mallya to own a South Africa beer business.