At long last, Vijay Mallya’s United Spirits has confirmed to stock exchanges that the company is in talks with the UK’s Diageo for a stake sale.
“United Spirits Limited and Diageo plc confirm that Diageo plc is in discussion with United Spirits Limited and United Breweries (Holdings) Limited in respect of possible transactions for Diageo plc to acquire an interest in United Spirits Limited,” United spirits said in a exchange filing today.
“However there is no certainty that these discussions will lead to a transaction,” it said.
This is a catch. Earlier, media reports had suggested that Diageo is only interested in a controlling stake in United Spirits.
“Diageo may get the right to appoint a majority of United Spirits’ board members, including the chairman,” a Bloomberg report had said.
There was also speculation that Chairman Vijay Mallya may not be willing to cede the control of his flagship company, which also owns Scottish whiskey firm Whyte & Mackey.
Shares of United Spirits have run-up on media reports that the two companies are in talks and Diageo is seeking a controlling stake in the India company. The stock was up more than 3 percent after the news today.
The stake sale will help Vijay Mallya raise the much needed funds to cut debt burden of his various businesses. Kingfisher Airlines, which has a debt of about Rs 7000 crore, is in dire need of funds to keep its operations afloat.
Pratip Choudhury, Chairman of SBI, the lead banker to KFA, on Monday said he has not heard anything about stake sale from Mallya.
"Mallya can unlock cash from a number of group companies like the liquor business," Choudhury was quoted as saying in a report in the Economic Times.