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Journalism of Courage
Diageo,the worlds biggest spirit group,and Vijay Mallyas UB Group on Tuesday said they are in talks again for a deal under which the UK-based company may pick up stake in United Spirits Ltd. The two companies had discussed stake sale in 2009 but were unsuccessful.
United Spirits said in a filing to the BSE,United Spirits and Diageo Plc confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm. Diageo,the maker of Johnnie Walker and Smirnoff,also issued a similar statement to the London Stock Exchange. However,both sides maintained there is no certainty of the transaction with the Mallya group keen on retaining management control over the spirit company after the deal. United Spirit has a debt of over Rs 8,000 crore.
Bankers are not sure whether Mallya will pump United Spirit sale proceeds into Kingfisher which has a debt of Rs 7,500 crore. Banks have been insisting that Mallya should bring more funds into the airlines, said an investment banking source.
The UB Group is the promoter of United Spirits with 27.78 per cent stake while FIIs hold 49.82 per cent stake. The two companies had discussed a deal in 2009,but the talks were unsuccessful. Diageo is reported to be trying to buy 15 per cent stake from Vijay Mallya,who is under pressure to raise capital for Kingfisher Airline. With a 25 per cent stake,Diageo will have to make an open offer for another 20-26 per cent. Diageo stake will go up to almost 51 per cent. Mallya may not want to give up control. If Diageo doesnt get control,it may not go for a stake purchase. Another way could be preferential allotment whereby Mallya and Diageo hold equal stakes, he said.
