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Mallya may lose yet another prized asset

business Updated: Nov 21, 2013 02:34 IST
Manu P Toms
Manu P Toms
Hindustan Times
Vijay Mallya

Liquor baron Vijay Mallya may lose yet another prized possession. Diageo, which now controls his erstwhile flagship United Spirits Ltd, may have to sell Whyte & Mackay if the British Office for Fair Trading (OFT) finds that it creates a monopoly in UK.

The OFT is expected to announce its decision on Monday, sources said. As the fate of Scottish whisky maker Whyte & Mackey hangs in balance, life has come a full circle for Mallya, who bought the company for $1 billion in 2007.

The Scotch Whisky Association (SWA), the influential lobby of Scotch whisky distillers, had strongly opposed his 2007 takeover of W&M. SWA had been opposing Mallya’s attempts to sell his Indian brands in Europe and the UK on the ground that they didn’t qualify as whisky and so, should be branded “Indian spirits” and so, didn’t want him to own a scotch brand.

Now, Mallya, who is chairman of United Spirits (his holding is at 15% compared to Diageo’s 25.2% stake in the company), may W&M slipping through his hands.

United Spirits, however, denied any move to sell Whyte & Mackay. “I would like to clarify that there is no such proposal. And we have no further comment,” said a spokesperson.

Diageo, the world’s largest spirits company, took effective management control of United Spirits earlier this year when it bought a part of Mallya’s stake and then increased its holding to 25.2% via a partially successful open offer.

Mallya who took control of the liquor manufacturer United Spirits at the age of 26 following the death of his father Vittal Mallya in 1983, built the UB Group into one of the world’s largest liquor companies.

He diversified into aviation in 2005 by setting up Kingfisher Airlines (KFA) and, thus, began his troubles. The airline ran up debts of about `10,000 crore and finally shut down in October last year.

Mallya was forced to sell assets, including a large part of his shareholding in USL to raise money. Meanwhile, more than a year after it was grounded, there is once again a buzz in the market about Kingfisher Airline being revived.