United Spirits, Diageo tie-up talks fail

The British firm was to buy 15 per cent stake in Mallya’s United Spirits Ltd (USL) and the two firms were in talks since early this year for the sale of USL’s treasury stock — created by amalgamation and demergers and not traded on exchanges.

The deal would have added global brands like Johnnie Walker Black Label and Smirnoff to the USL stable, which already has McDowell’s No.1, Romanov, Royal Challenge and Black Dog in portfolio.

A top USL official confirmed the development but did not want to be identified. Meanwhile, when contacted, the company spokesperson said that he would need to check the details and get back.

UB Group was planning to retire a portion of its debts through the stake sale to Diageo, which eventually was keen on picking up more than 15 per cent in India’s largest spirits maker.

In May 2007, UB had raised a debt of 595 million pounds for buying Scotch major Whyte & Mackay.  The UB Group, however, was not interested in selling more than 15 per cent in USL because under the Securities and Exchange Board of India rules the move would have triggered an open offer for another 20 per cent share, which would have helped Diageo match promoter’s shareholding in the company.