Diageo in talks to buy stake in United Spirits

 
Kasmira Jefford
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DIAGEO yesterday confirmed it has revived talks with United Spirits, the Indian liquor giant controlled by billionaire tycoon Vijay Mallya, about buying a stake in the company.

United Spirits made the announcement ahead of its annual meeting yesterday but said there was no certainty that talks would lead to a deal.

Mallya has been struggling to raise funds for his loss-making airline Kingfisher, prompting market speculation that he may need to sell part of his 28 per cent stake in United Spirits.

The group originally held talks with Diageo in 2008 but these turned sour in 2009 when the two sides disagreed over the bid price.

The Johnnie Walker maker is said to be looking to initially buy a 15 per cent stake from Mallya’s UB group and 10 per cent from other investors, making it the largest shareholder. India has the world’s largest whisky market and booming demand from a fast-growing middle class but high import duties make it access difficult for outsiders.

PROFILE: INDIA’S FLAMBOYANT TYCOON

WITH his Kingfisher airline losing a million dollars a day as India’s economy slows, Vijay Mallya is eager to raise funds from his drinks business, although the flamboyant businessman will still have a wide portfolio of industries to watch.

Mallya’s Bangalore-based UB Group, which he inherited after his father Vittal’s death, also has engineering and chemical arms, as well as stakes in the Force India Formula 1 team, two football clubs and the city’s cricket team.

He is known in India as a hard-working and shrewd businessman, although there are worries that he has spread his talents too thin. As well as a number of business ventures, Mallya enjoys a career as a politician, currently serving his second term in India’s upper house of representatives, the Rajya Sabha, as an independent.

Beyond his political and industrial careers Mallya is something of a celebrity in India, frequently being photographed with supermodels aboard his private yacht and throwing parties with film stars. His lifestyle has seen Mallya adopt the same nickname as his company’s slogan: “King of the Good Times”.

Having taken control of UB Group in 1993 – when he was just 28 – Mallya has turned the company into a global enterprise and the 56-year-old is now worth around $1bn (£620m), according to the Forbes rich list, making him the 45th richest man in India.