Vijay Mallya’s hyped deal to sell 14 per cent in United Spirits Ltd to global giant Diageo seemed to be on the rocks on Friday, but the liquor baron dismissed a report that sent USL’s shares crashing by 6.7 per cent.
Reuters quoted a Diageo official in Singapore as saying that both parties could not find a structure acceptable to both patners and expressed doubts on the transaction.
But the United Breweries group, whose empire spans brands like Kingfisher Beer and Royal Challenge whiskey, denied a breakdown of talks.
“Talks are very much on. Structuring issues due to anti trust or monopoly issues which lawyers are addressing,” Mallya said in a statement.
The USL scrip closed with a loss of 6.7 per cent at Rs 666.55 against its previous close of Rs 714.5 per share.
Over the last six months both the parties were in several rounds of discussions but a final picture is yet to emerge. While Mallya is looking for a good valuation to divest a strategic stake, Diageo is eyeing to make a market entry to the mass consumption Indian Made Foreign Liquor (IMFL) segment.
Mallya is expected to utilise the funds to reduce debt in USL. The company had borrowed heavily to fund the acquisition of Glasgow-based scotch maker Whyte & Mackay.