Vijay Mallya may have once again hit a rough patch. Nearly six months after the liquor baron opened talks with global spirits company
Diageo Plc to offload a strategic stake in his flagship
United Spirits Ltd (
USL)—a move that led the Indian firm’s stock surge a phenomenal 80%—it is understood that the discussions have hit a rough patch.
There has been intense speculation that the deal is in the final lap
and will be announced anytime soon, but it is understood now that there
are many details to be hammered out before there is finality, if at all.
The main aspect, of course, is who will control
USL, India's largest spirits company with a 52% market share.
While it is learnt that Diageo may be pushing for a management control of
USL,
Mallya may have opted for a rethink on this. Though the UB Group
spokesperson offered no comments on the ongoing talks, people closely
involved in structuring the transaction indicated there were several
hurdles. “There are many hurdles to cross...but discussions are still
going on in good faith to find solutions,” as told.
According to information available, Mallya is mulling various options
to rope in Diageo by offloading a part of his 28% stake, while also
parallely offering the entire 3% held in treasury stock to Diageo.
While control of the Rs9,500-crore
USL is a major issue between Mallya and Diageo, the other aspect which may have been unwieldy is the aspect of
USL owning Scotland-based Whyte and Mackay. “There are anti-trust issues in the
European Union
if Diageo gets to control the phenomenal reserves of Whyte and Mackay.
While both companies are understood to be working with anti-trust
regulators to find a way forward on this aspect, there may have been
some problems due to which the talks may have hit a road-block,” a
senior official of UB Group indicated on the possible reasons for the
delay in the transaction.
At 2.21 pm, the stock was trading at Rs1265.45, down by 2.01%, with a volume of 2.72 lakh shares trading on BSE.
