Diageo talks for United Spirits stake bog down

08 May 2009

Diageo Plc, the world's largest alcoholic drinks group, has failed to reach a deal to buy a stake in Vijay Mallaya's United Spirits Ltd, the largest seller of alcholic drinks in India, as the two sides have been unable to agree on details. The talks have been on since last September.

United Spirits had said in February that it was willing to offer a stake of more than 15 per cent and a seat on the board to Diageo. United Spirits chairman Mallya was quoted in March as saying that Diageo and three other global spirit makers had shown interest in buying a stake in United Spirits.

Diageo said it has not found an acceptable structure yet with United Spirits, CNBC-TV18 reported on Friday. "Talks to buy stake in United Spirits have not progressed," a company spokesperson said.

Diageo, owner of Johnnie Walker whisky and Smirnoff vodka (both popular upmarket brands in India) as well as Guinness stout beer, said it would continue to grow strongly in India even if the deal with United Spirits doesn't materialise.

It added that these comments are in sync with the company's earlier position. Discussions with United Spirits will continue. However there is no certainty that they will result in a transaction with USL.

Commenting on Diageo's statement, Mallya said talks with Diageo are very much on. "However, there are structuring issues due to anti-trust and monopoly concerns. Our lawyers are addressing those issues."