Diageo Plc, the world's largest alcoholic drinks group, has failed to reach a deal to buy a stake in Vijay Mallaya's United Spirits Ltd, the largest seller of alcholic drinks in India, as the two sides have been unable to agree on details. The talks have been on since last September.
United Spirits had said in February that it was willing to offer a stake of more than 15 per cent and a seat on the board to Diageo. United Spirits chairman Mallya was quoted in March as saying that Diageo and three other global spirit makers had shown interest in buying a stake in United Spirits.
Diageo said it has not found an acceptable structure yet with United Spirits, CNBC-TV18 reported on Friday. "Talks to buy stake in United Spirits have not progressed," a company spokesperson said.
Diageo, owner of Johnnie Walker whisky and Smirnoff vodka (both popular upmarket brands in India) as well as Guinness stout beer, said it would continue to grow strongly in India even if the deal with United Spirits doesn't materialise.
It added that these comments are in sync with the company's earlier position. Discussions with United Spirits will continue. However there is no certainty that they will result in a transaction with USL.
Commenting on Diageo's statement, Mallya said talks with Diageo are very much on. "However, there are structuring issues due to anti-trust and monopoly concerns. Our lawyers are addressing those issues."
Asia's drinks sector has seen a flurry of mergers and acquisitions this year. On Thursday, Anheuser-Busch InBev agreed to sell South Korean subsidiary Oriental Brewery to Kohlberg Kravis Roberts & Co for $1.8 billion.
Diageo sales sink 7 per cent
Diageo PLC on Thursday reported a 7 per cent fall in fiscal third-quarter core sales as markets weakened in the second-half of fiscal 2009, but reiterated its annual profit guidance for core operating profit growth in the range of 4-6 per cent – which is still well below last year's 9 per cent rise.
Chief executive Paul Walsh said there has been a "significant decline in the Russian market from the beginning of January, and the global travel retail business continues to be adversely affected by the economic conditions." However, he assured investors that the company is "taking the steps necessary" to emerge from the global downturn as a stronger business.