Drinks giant Diageo has agreed to purchase 53.4% stake in India-based United Spirits for nearly £1,285m.

Diageo will first purchase 27.4% stake in United Spirits for £660m, for which it will have to first buy 19.3% stake in current share capital of United Spirits from United Breweries Holdings, Palmer Investment Group and United Breweries Sports Management and SWEW Benefit Company and then ask United Spirits shareholders to approve the allotment to Diageo at a rate of INR1,440 ($26.4) per share of new shares that accounts to 10%.

Then, Diageo will launch a mandatory tender offer to public shareholder of United Spirits to acquire 26% of the enlarged share capital of United Spirits at a rate of INR1,440 ($26.4) per share.

Upon successful approval and completion of the above two purchases, Diageo will hold 53.4% of enlarged share capital of United Spirits.

Diageo CEO Paul Walsh said he was happy for Diageo to get an opportunity to be a part of Indian local spirits market.

“As a result of the agreements we are announcing today 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,” Walsh added.

“The combination of USL’s strong business with the capabilities which Diageo brings as the world’s leading premium drinks company will ensure that USL continues to lead the industry in India.

“The acquisition of our shareholding in USL is fully aligned with our strategy to build our presence in the world’s faster growing markets and enhances our position as the world’s leading premium drinks company.”