Diageo, which recently acquired a 25 per cent stake, as well as management control, in United Spirits Limited (USL), would have to wait for some time to entirely integrate the target into its books. The primary hurdle to the exercise is USL’s Scotland-based wholly-owned subsidiary Whyte & Mackay, which USL acquired in 2007 for $1.2 billion.
The Office of Fair Trading, UK, is studying whether the fact that Diageo took control of USL has resulted, or might be expected to result, in a substantial reduction of competition for goods or services within any market in the UK.
As a result, Diageo cannot integrate the numbers of Whyte & Mackay until the Office of Fair Trading takes a decision on the matter.
A Diageo spokesperson said the company couldn’t comment on the integration of Whyte & Mackay, as the Office of Fair Trading, UK, was looking into the matter.
Whyte & Mackay accounts for 17 per cent of USL’s Rs 10,000-crore annual sales.
Earlier, Diageo had said if Whyte & Mackay was a hurdle, the company wouldn’t be averse to divesting that asset. USL had also considered divesting 49 per cent in Whyte & Mackay to meet Office of Fair Trading norms.