LONDON, March 25, 2026, 13:22 GMT
Diageo shares jumped up to 2.4% early Wednesday in London after news broke that its Indian subsidiary is offloading the Royal Challengers Bengaluru cricket franchise for 166.6 billion rupees ($1.8 billion). The sale, which could help ease debt, landed with investors.
Timing’s key here. Just last month, Chief Executive Dave Lewis slashed Diageo’s fiscal 2026 sales forecast, chopped the half-year dividend in half, and flagged net debt at $21.7 billion as the company struggles with sluggish U.S. demand and lingering weakness in China. Reuters noted Diageo’s debt was running above its own debt-to-earnings target.
United Spirits plans to offload its entire holding in Royal Challengers Sports, handing the reins to a group led by Aditya Birla Group, Times of India Group, Bolt Ventures, and Blackstone. The transaction includes both the men’s IPL team and the women’s squad, but it’s not a done deal yet—signoff is still needed from the Board of Control for Cricket in India and the Competition Commission of India.
Diageo holds a 55.9% stake in United Spirits, which means the group stands to collect just above $1 billion if United Spirits’ board opts to distribute the proceeds via a special dividend, according to Bloomberg. Jefferies analysts estimate this move could boost Diageo’s earnings by almost 1%.
RBC’s James Edwardes Jones wasn’t surprised by the disposal. UBS called the price tag steep, putting Diageo’s slice of the proceeds just shy of 740 million pounds. Still, they said, the shares have yet to show that demand for U.S. spirits is holding steady.
Lewis hasn’t wasted time offloading assets and slashing expenses. Last May, Diageo announced a $500 million cost-saving program, promising major divestments. By December, the group moved to offload its East African Breweries stake to Asahi for $2.3 billion.
With the RCB disposal, there’s fresh evidence the portfolio review isn’t just talk. That’s a key point for a drinks sector still feeling the heat: Pernod Ricard, Remy Cointreau, and Campari all slid with Diageo after its February sales-and-dividend shakeup, Reuters reported last month. Brown-Forman, meanwhile, managed to top estimates thanks to steadier demand for its whiskey and ready-to-drink lines.
Still, what’s playing out here is primarily about debt, not any real uptick in demand. Diageo’s half-year numbers painted a soft picture for U.S. spirits and ongoing sluggishness in China. According to Bloomberg, how United Spirits ultimately allocates the RCB proceeds comes down to a strategic call by its board.
Even after Wednesday’s gains, Diageo has barely recovered from the earlier slump. The stock tumbled almost 10% on Feb. 25—the sharpest single-day loss since November 2023—on the heels of Lewis’s warning: organic sales for fiscal 2026 are set to drop 2% to 3%, excluding currency and deal impacts. At the time, Goodbody’s Fintan Ryan pointed out Lewis shouldn’t be judged until his full strategy is revealed. Lewis, for his part, said he’ll present it to the board in the second quarter, aiming for a public rollout in the third.
