Diageo India flags RCB sale report as speculative in letter to stock exchange

Diageo India, the Indian subsidiary of UK-based Diageo Plc and owner of the Royal Challengers Bengaluru (RCB) franchise in the Indian Premier League (IPL), has disputed allegations that it intends to sell its stake in the franchise.

On Tuesday, June 10, Diageo India stated in a letter to the Bombay Stock Exchange (BSE) and the BSE Surveillance Department that media allegations about the suspected transaction are completely speculative.

“The firm would want to emphasise that the aforementioned media rumours are speculative in nature, and it will not pursue any such conversation. Mital Sanghvi stated: “This is for your information and records.”

Diageo is listed on the Bombay Stock Exchange (BSE), and shares of its Indian affiliate, United Spirits, have risen in response to speculation over the probable sale of the RCB franchise, which won its first Indian Premier League title a week earlier.

Bloomberg reported that Diageo is considering selling RCB, which fuelled market speculation on Tuesday.

The news came after RCB won its first IPL title since the league’s start in 2008. However, the celebrations in Bengaluru turned sad on June 4, when 11 people died and dozens others were injured during the victory festivities.

“Being a public company, there will be a lot of pressure on reputational damage,” said a prominent figure in the country’s sports ecosystem who is well-versed in the IPL scenario.

The reports indicate that Diageo is considering a USD 2 billion valuation for the RCB, one of the eight original IPL franchises founded by Vijay Mallya in 2008. There were comparisons made to the Gujarat Titans (GT), which Torrent acquired for INR 7,500 crore, approximately USD 1 billion.

But, Lalit Modi, the founder of the IPL believes that RCB’s whopping USD 2 billion valuation is justified. He noted that GT’s valuation was a one-year-old deal and stated that he would not be surprised if RCB is sold for an even higher price.

“No decision is final, and they may decide against selling the team, the people said, asking not to be named as the details are private,” said the Bloomberg report.