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| Diageo-USL talks fail |
| Press Trust Of India / New Delhi Aug 26, 2009, 00:23 IST |
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The World’s largest alcohol player Diageo’s protracted efforts for a pie in India’s liquor king Vijay Mallya’s group company failed today, but neither side gave reasons for the abrupt ending.
The British company was to buy 15 per cent stake in Mallya’s United Spirits Ltd (USL) and the two companies 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 he would need to check the details.
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 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 the promoter’s shareholding in the company.
Until recently, the UB Group had maintained that the negotiations between the two companies were on, although Mallya had said the delay in finalisation of the deal was on account of anti-trust and monopoly issues.
The UB Group had recently sold 10.27 per cent stake in USL to a private equity company for about Rs 950 crore to retire a part of debt.
In 2005, Vijay Mallya-led United Breweries acquired Shaw Wallace & Company, following which it was merged with the group’s flagship company USL last year.
As a result of this merger, about 17 per cent treasury stock was created.
The group has been looking at raising up to $300 million through stake sale in USL.
“We are looking to raise another $250-300 million through the sale of stake in United Spirits Ltd. It could be a mix of treasury stock as well as other shares,” UB Group Chief Financial Officer Ravi Nedungadi had said.
United Spirits has over 150 products in its portfolio.
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