Dive Brief:
- Diageo has offered $1.9 billion for a controlling stake in India's United Spirits, the biggest distillery in the world's biggest whiskey market.
- The offering price values United Spirits at some 39 times EBITDA -- more than double the valuation of the 16 most recent deals in the industry, according to Bloomberg.
- The offer comes a year after an earlier bid by Diageo, the world's largest distiller, failed to win much enthusiasm from United Spirits' shareholders.
Dive Insight:
The truly remarkable thing about Diageo's offer is the 39 times multiple, something other beverage companies are unlikely to get in valuations of their companies. That's because Diageo has found itself in a bit of a tough spot, as its earlier offer for United Spirits in 2013 failed. Diageo has already told British regulators it would sell Scottish whiskey maker Whyte and Mackay to ease concerns about the price-controlling power of a Diageo-United combination
Since Diageo has to dump Whyte and Mackay -- and will likely take a substantial loss to do so -- it's likely that the distiller wants something from the deal, and is willing to pay dearly to get it.