Diageo extends Force India sponsorship as part of Mallya settlement

Alcoholic drinks producer Diageo has extended its sponsorship of Force India as part of a settlement deal with Vijay Mallya, the team principal and part-owner of the Formula One motor-racing team.

The sponsorship deal will run for five seasons, from 2016 to 2020, and is worth $15m (€13.6m) per season, Diageo said.

Diageo, which owns brands such as Guinness and Smirnoff, will also pay Mallya, who had been refusing to resign as chairman of United Spirits, $40m up front and a further $35m over the next five years. Mallya will step down immediately from his role at United Spirits and refrain from competing, interfering or buying shares in the Indian drinks company for the same five-year period.

Diageo has also agreed not to oust his son, Sidhartha Mallya, from the board of the Royal Challengers Bangalore Indian Premier League Twenty20 cricket franchise, which is controlled by Diageo.

The settlement ends a long-running dispute over the future of Mallya at United Spirits, which was acquired by Diageo in 2012.

“India is an exciting growth opportunity, and United Spirits has the management team, strategy and capability to deliver on that opportunity,” Diageo chief executive Ivan Menezes said. “The agreement announced today is in the best interests of both Diageo and United Spirits and allows United Spirits to build on its strong platform in one of the biggest spirits markets in the world.”