Vijay Mallya deals bring Diageo under Sebi lens

NEW DELHI: In fresh trouble for Diageo, markets regulator, the Securities and Exchange Board of India (Sebi), is considering directing the British liquor giant to

NEW DELHI: In fresh trouble for Diageo, markets regulator, the Securities and Exchange Board of India (Sebi), is considering directing the British liquor giant to make additional payment to the minority shareholders of United Spirits Ltd (USL).

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USL had acquired shares under an open offer in 2013 to compensate the minority shareholders for some ‘preferential’ treatment to erstwhile promoter Vijay Mallya.

Diageo contests this demand and plans to file an appeal.

However, regulatory sources said the market regulator is prima facie of the view that the interest of minority investors was compromised because of non-disclosure of certain deals, including about some loan guarantees that Diageo had entered into with Mallya while acquiring his controlling stake in USL.

Years after signing the multibillion dollar takeover transaction with Mallya, Diageo is facing regulatory troubles on multiple fronts, and is also at the loggerheads with the embattled businessman himself, despite a $75-million sweetheart deal it offered him earlier this year.

The latest notice from Sebi was triggered because of the disclosure of the so-called Watson transaction, under which a Diageo entity had provided guarantee to Watson Ltd, a company affiliated with Mallya.