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Diageo is in
talks to acquire a stake in Indian
billionaire Vijay Mallya's United
Spirits Ltd, reviving an on-again,
off-again courtship that would ramp up
its presence in the world's largest
whisky market. However there is no
certainty that these discussions will
lead to a transaction.
Diageo Plc is in talks to acquire a
stake in Indian billionaire Vijay
Mallya's United Spirits Ltd, reviving an
on-again, off-again courtship that would
ramp up its presence in the world's
largest whisky market.
Mallya has been scrambling for nearly a
year to raise funds for his ailing
Kingfisher Airlines Ltd, prompting
market speculation that he may need to
offload stakes in United Spirits,
India's dominant spirits maker, or
United Breweries Ltd, producer of his
flagship Kingfisher beer.
Diageo, the world's biggest spirits
group, has long coveted an expanded
presence in India. In 2008, the two
sides held talks that collapsed, but
sources close to the situation said
Diageo is hopeful of a deal this time as
Mallya is more open to offers.
The maker of Johnnie Walker whisky and
Smirnoff vodka is looking initially to
buy a 15 percent stake from Mallya's UB
Group, which owns about 28 percent of
United Spirits, and a further 10 percent
from other shareholders, one banker
familiar with the matter told Reuters on
Tuesday.
That would dislodge Mallya as the
largest shareholder in United Spirits.
"There is no certainty that these
discussions will lead to a transaction,"
United Spirits, the world's No.1 spirits
maker by volume, said in a statement to
India's stock exchanges.
Mallya declined to elaborate to
reporters following United Spirits'
annual shareholders meeting on Tuesday
in Bangalore.
If Diageo took control of United Spirits
it would need to unload the Indian
company's Whyte & Mackay scotch whisky
business to avoid anti-trust problems.
Diageo is the world's biggest scotch
whisky maker with around a third of the
market.
Analysts see a deal as positive for
Diageo as India is the world's largest
whisky market and Diageo is the world's
No.1 Scotch whisky maker.
"Emerging market sales would jump to 45
percent of Diageo sales from 40 percent
now, and Diageo would gain a sizeable
footing in what one day should be the
world's largest Scotch market," said
analyst Pablo Zuanic at brokers Liberum
Capital.
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