The company has accepted the tender of 37,785,214 shares in United Spirits (USL) at INR 3,030 per share.
Diageo will have a total interest of 54.78% in United Spirits and expect to fully consolidate the results of USL from today.
Ivan Menezes, chief executive of Diageo, said: “Our announcement today is significant for Diageo. India has now become one of Diageo’s largest markets and will be a major contributor to our growth ambitions.
“USL is the leading player in the attractive Indian spirits market with great brands, a unique route to consumer and talented people. We can now combine that strong platform with Diageo's strengths to create a compelling future in India for Diageo, USL and the Indian spirits industry.”