INDIA – World’s spirit major and beer maker Diageo plans to sell its 30,000 sq. ft. of UB Tower prime office space in Bengaluru to DivyaSree Group for US$380.41 per sq. ft.
The deal, reported to be the highest ever fetched in the city’s office market will see Diageo sell and lease back the space to operate its office from the same premises after the transaction, according to ET Retail.
“Diageo is in discussion with a Bangalore-based investor and is in the final stages of the deal closure. It can either be an entity level transaction or bought by an individual,” said people aware of the deal.
“The firm (Diageo) also has additional 30,000 sq ft in UB City that it is looking to retain, apart from other real estate assets.”
Diageo Plc’s India arm owns five floors in UB tower and will only sell four floors as part of the assets disposal plan.
One of the people said also has additional 30,000 sq ft in UB City that it is looking to retain, apart from other real estate assets.
“This move is in line with our strategy to monetise non-core assets,” said a spokesperson from United Spirits Limited, a subsidiary of Diageo.
Based on media reports, the firm has been looking to monetise its non-core assets to reduce its debt and this was part of the its assets disposal plan.
Diageo agreed to buy a controlling stake in United Spirits Ltd, controlled by Indian businessman Vijay Mallya, for US$2.1 billion in 2012.
It acquired 53.4% of USL, India’s largest spirits company then, in a cash and debt deal.
The deal was part of a new wave of consumer goods M&A in Asia-Pacific after Heineken’s US$6.4 billion buyout of the maker of Tiger beer and SABMiller’s US$12 billion acquisition of Foster’s in December.
The owner of Johnnie Walker and Guinness has been focusing on emerging markets where the middle class is significantly growing an appetite for expensive drinks.
India was identified to become a significant market for Diageo after the United States.
The brewer which also owns the Tanqueray gin, Baileys liquer and Smirnoff vodka then said it had agreed to a request from Mallya, owner of USL to form a joint venture to run a sorghum beer business in South Africa, a new market with growing drinking class.
