London, Sep 25: British multinational alcoholic firm Diageo has confirmed that it is holding talks to buy a stake in United Spirits, the Indian drinks giant controlled by tycoon Vijay Mallya.
Diageo and United Spirits said in a joint statement on Tuesday that the two companies were “in discussion with United Spirits Limited and United Breweries (Holdings) Limited in respect of possible transactions”, The Telegraph reports.
According to the paper, a deal with United Spirits would give Diageo crucial access to India’s local spirits market, which is notoriously difficult to penetrate given its complicated bureaucracy and high taxes and would give the firm a strategic control of United Spirits, India’s second largest drinks group.
United Spirits is valued at around 130 billion rupees and owns Whyte and Mackay, the 168-year-old Scotch whisky brand.
Paul Walsh, chief executive of Diageo, reiterated his interest in taking a minority stake in United Spirits at its year-end results presentation in London earlier this month.
However, he insisted any deal would have to be on the right terms and he would not be pressured into “frittering away” Diageo’s 1.6 billion pound cash mountain.
Mallya, who owns a 28pc stake in United Spirits, is said to be in the need money to prop up his loss-making airline Kingfisher, which will require 600 million dollars in the next few months to keep its planes in the air, according to some estimates.
However, the statement given by both firms also clarified that there is no certainty that the discussions will lead to a deal. In 2009, Diageo walked away from talks amid disagreements over valuation, it added. (ANI)