Vijay Mallya’s Golden Goodbye From Diageo Scores $75M For Force India F1 Team (2nd Update)
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| Vijay Mallya |
Mallya's "golden goodbye" from the Diageo drinks company will "ensure an injection of crucial sponsorship money for the Formula One team."
Reports from India said that Mallya has been "forced to walk away from Diageo," but takes with him a $75M payoff plus $15.3M of annual Force India sponsorship from the Smirnoff vodka brand, owned by Diageo, "for another five years."
As golden goodbyes go, "this one will put smiles on faces at the Silverstone factory where staff are working hard to refine the team’s 2016 car."
The payoff "brings an end to a long saga in India where Mallya’s family businesses have become a major source of controversy."
His Kingfisher Airlines business "crashed three years ago, while he has been at war with Diageo ever since the British multinational took over United Spirits, the brewery business." Mallya is "expected to spend more time running the Force India team" LONDON TIMES
DNA INDIA reported Mallya asserted that his stepping down as United Spirits Ltd. chair "will not affect his control in Formula One team, Sahara Force India." Mallya said that he is "still the boss at Force India."
Mallya: "Nothing has changed at Force India. I remain team principal and managing director. If you take loan, you give some shares as security. That does not mean security has changed. Diageo may have security over my shares but ownership has not changed. … Formula One has nothing to do with my stepping down from United Spirits. They are not connected at all" DNA INDIA
In London, Amy Kazmin reported under the terms of the agreement announced, Diageo will pay Mallya $75M over five years, "during which he has agreed not to compete against the group."
Diageo, which will book the payment as an "exception item," defended the hefty payout, and said that it would "end the uncertainty hovering over United Spirits, and its governance."
Diageo CEO Ivan Menezes said that the agreement was "in the best interests" of both companies FINANCIAL TIMES.
The INT'L BUSINESS TIMES' Kedar Grandhi reported the deal will ensure that Mallya's son, Sidhartha, is "not ousted for two years from the board of the Royal Challengers Bangalore cricket team, which is owned by Diageo" IB TIMES.
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| Vijay Mallya (L) and Nico Hulkenberg |
02/29/16 (GMM) Vijay Mallya has hit back at speculation his involvement in the F1 team Force India is coming to an end.
Last week, after a long battle with Diageo, the flamboyant Indian stepped down from his alcoholic company United Spirits.
According to local reports, the $75 million 'golden handshake' involved him also severing his involvement in sporting arenas, including Indian IPL cricket.
And there were also rumors he would have to leave Force India as well, as Diageo had been holding Mallya's 42.5 per cent stake in the Silverstone based team as collateral against a loan.
The speculation has been building for some time, and not only because of jailed team co-owner Subrata Roy and title sponsor Sahara's troubles.
Eagle-eyed observers also noticed that only the 'Sahara Force India' branding on the front of Nico Hulkenberg and Sergio Perez's race overalls in pre-season testing appeared to be temporarily sewn on.
But Mallya insisted to the Indian news agency PTI: "Nothing has changed at Force India. I remain team principal and managing director.
"If you take (a) loan, you give some shares as security. That does not mean (the) security has changed. Diageo may have security over my shares but ownership has not changed.
"I don't know why everybody is making a (big) deal about it. Formula one has nothing to do with my stepping down from United Spirits. They are not connected at all," he added.
02/28/16 The Hindustan Times is reporting that the golden handshake that Vijay Mallya signed with Diageo means that his involvement in the Formula 1 team is now over.
It says that Watson Ltd, the Mauritius company that owns Mallya’s shares in the F1 team’s holding company, is now owned by Diageo, as the result of an unpaid loan of $135 million from Standard Chartered Bank for which Diageo stood as a guarantor.
Watson defaulted on the loan but remained liable for all amounts paid.
Watson owns 42.5 percent of the team. Another 42.5 percent is owned by Roy Subrata Sahara, currently in jail in India, who says that he wants to sell his shares. The remaining 15 percent is owned by the Mol Family, which was involved with the team during its Spyker era. Joe Saward