Diageo-United Spirits deal clearance 'work in progress':CCI

Fair trade regulator Competition Commission of India today described as "work in progress", the review of the application seeking nod for the Diageo-United Spirits deal.

Competition Commission of India (CCI) is believed to have expressed reservations over the proposed Rs 11,166 crore purchase of a majority stake in UB group's United Spirits Ltd by Diageo Plc.

Without disclosing specific details on the deal, CCI Chairman Ashok Chawla said the review of the application is "work in progress".

"... Once the filing notification takes place, it is circulated to all members and I will also have a look at it. I am not fully aware of what the issues are," Chawla said.

He was responding to a query about the deal on the sidelines of a meeting here with country's top CEOs which was organised by the Commission.

CCI, whose approval is necessary for all major M&A deals involving Indian companies, is believed to have found certain clauses of the deal to be based on probabilities and not definitive in nature.

"I believe they are that what would be the post merger market issue... Normally the focus (at the time of such deals) of all the appraisals that take place on mergers and acquisitions is about what will happen in the market place for that particular item or commodity," Chawla said.

In November last year, UK-based Diageo had announced a deal whereby it agreed to acquire up to 53.4% stake in United Spirits for an aggregate amount of Rs 11,166.6 crore.

United Spirits, the country's largest spirits company, is part of Vijay Mallya-led UB Group, whose aviation venture Kingfisher Airlines has been going through turbulent times.

As part of the deal, Diageo would acquire 27.4% stake for Rs 5,725.4 crore through a combination of share purchase from existing promoters and preferential allotment of shares. In addition, it would purchase further 26% stake for Rs 5,441.07 crore through open offer.

The proposed open offer for an additional 26% stake in USL entails purchase of about 3.8 crore shares at a price of Rs 1,440 per share, totalling Rs 5,441 crore, by Relay BV, a wholly-owned subsidiary of Diageo.

Capital market regulator Sebi has also raised concerns over the proposed deal.