United Spirits settles Officer’s Choice dispute; stock up 6%

NEW DELHI: Vijay Mallya-owned United Spirits Ltd (USL) surged over 6.6 per cent on Tuesday after USL and Kishore Chhabria-led Allied Blenders & Distillers (ABD) agreed to settle their dispute over Officers Choice.

Both the parties agreed to settle the dispute over the ownership of Officer's Choice, the largest-selling whisky brand in the world, out of court.

At 10:50 am, United Spirits Ltd was trading 5.1 per cent higher at Rs 1241.85. It has hit a high of Rs 1244 and a low of Rs 1204 today.

“USL will receive Rs 8 crore from Allied Blenders & Distillers (ABD) - that owns Officer’s Choice - in return for withdrawing all court cases claiming right over the whisky, which is the flagship brand of ABD,” ET reported.

“Mallya and Chhabria had a deal in the past by which Mallya agreed to part with Offcier’s Choice whisky and 130 crore in cash in return for full control of Herbertsons in which Chhabria had a substantial stake,” added the report.

Brokerage view:

On Monday, CLSA downgraded United Spirits from ‘underperform’ to ‘sell’, but has raised its price target from Rs 625 earlier to Rs 725.

CLSA sees potential deal with Diageo as a game changer and the deal will help the company to reduce gearing levels and will boost earnings. The brokerage assigns Rs1200-1600 per share fair value, if the deal is consummated. The deal also offers operational advantages in long term while in near term these are limited.