25th Feb 2016 16:18
LONDON (Alliance News) - Diageo PLC said on Thursday that Vijay Mallya has resigned as chairman and non-executive director of Indian subsidiary United Spirits Ltd, and, under the agreement of the resignation, it will pay Mallya USD75.0 million.
The FTSE 100 beer and spirits maker said it will make the payment over a five-year period, subject to Mallya terminating his appointment and agreeing to a five-year global non-compete, non-interference, non-solicitation and standstill undertaking. Mallya also agreed that he and his affiliates will not pursue any claims against Diageo, United Spirits or their affiliates.
Mallya will receive USD40,000 of the amount immediately, with the rest in instalments.
Diageo said Mahendra Kumar Sharma, who is currently working as an independent, non-executive director and chairman of the audit committee of United Spirits, will take over the position.
As part of the arrangements, Diageo said it had extended Smirnoff vodka's sponsorship of the Force India Formula 1 team of which Mallya is team principal and part-owner for the next five seasons. The cost of this sponsorship continues to be USD15.0 million per season.
"India is an exciting growth opportunity, and USL has the management team, strategy and capability to deliver on that opportunity," Diageo Chief Executive Ivan Menezes said. "The agreement announced today is in the best interests of both Diageo and USL and allows USL to build on its strong platform in one of the biggest spirits markets in the world."
Diageo owns 54.78% of United Spirits.
Diageo shares were up 1.5% at 1,874.00 pence near the close on Thursday.
By Hannah Boland; [email protected]; @Hannaheboland
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