Diageo to sell bulk of Whyte & Mackay to salvage United Spirits deal

Liquor giant Diageo has offered to sell the bulk of its stake in Whyte & Mackay, to address regulatory concerns that its $2-billion buyout of Indian liquor major United Spirits is anti-competitive.

Whyte & Mackay, a UK subsidiary of United Breweries Ltd, owners of United Spirits, is an active supplier of whisky, besides being a player in other spirits, including vodka.

The Office of Fair Trading (OFT), the UK's fair trade watchdog, on Monday said Diageo's acquisition of United Spirits is against competition and may lead to higher whisky prices in the UK, forcing the company to offer selling bulk of Whyte & Mackay.

The OFT would now have a fresh look at the deal in the wake of the proposal made by the companies to sell bulk of Whyte & Mackay business to address the competition issues in the British whisky market.

According to the UK regulator, the merger would lead to a substantial lessening of competition in the supply of blended whisky to retailers.

Vijay Mallya-led United Breweries had snapped up Whyte & Mackay for about 595 million pounds (nearly Rs5,000 crore) in 2007.

Whyte & Mackay's brands include single malts  Dalmore, Isle of Jura, Glayva, Fettercairn, Vladivar vodka and Whyte & Mackay blended Scotch.

Both Diageo and Whyte & Mackay are leading suppliers of blended bottled whisky in the UK, especially to supermarkets and other large retailers.

The Competition Commission of India (CCI) had, in February this year, approved Diageo's majority stake purchase in United Spirits in a deal worth about $2 billion.

In August 2013, key members of United Spirits Limited (USL), including CEO Vijay Mallya, White & Mackay CEO John Beard, and director Ayani Nedungadi, had resigned from positions at Whyte and Mackay in the wake of the purchase of a controlling stake of USL by Diageo.