United Spirits falls over 8% after Diageo offers to sell W&M's whiskey assets

Shares in United Spirits fell as much as 8.4 percent on profit-taking after Diageo offered to sell most of its unit Whyte & Mackay’s (W&M) whisky assets to address Britain’s competition concerns.

In July, Diageo took a 25 percent stake in United Spirits, the owner of Whyte & Mackay.

United Spirits had gained 8.2 percent in the previous two sessions in anticipation of the news, compared with a 1.9 percent gain in the Sensex.

W&M, which was acquired by United Spirits in 2007 for Rs 4,800 crore, is a leading supplier of blended whiskey to supermarkets and other top retailers in the UK. The Whyte & Mackay brand competes heavily against Diageo’s branded blends such as Bell’s.

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The Office of Fair Trade (OFT), the UK’s competition watchdog, believes that Diageo and W&M’s tie-up will make the entire market anti-competitive as the two companies together could dominate the blended whisky market in the UK, probably resulting in prices rising.

In order to ease competition concerns stemming from its acquisition of controlling interest in Vijay Mallya-controlled United Spirits,the 169-year-old scotch distiller has offered to sell Whyte & Mackay’s Invergordon, Jura and Fettercairn distilleries while retaining the Dalmore and Tamnavulin distilleries.

Analysts say the sale of W&M, while reducing the company’s debt, may already be reflected in United Spirits’ shares, which have risen more than five-fold since the start of 2012.

Shares in United Spirits down 1.5 percent as of 10:28 a.m.

With inputs from Agencies