Vijay Mallya-owned United Spirits said on Tuesday that it is in talks to sell a stake to the UK-based Diageo Plc, the world’s biggest spirits company. Following this, the shares of United Spirits rose 8.9 per cent to Rs 1147.70, their highest since May 2011. The shares of United Breweries Ltd, United Breweries Holdings Ltd, Kingfisher Airlines Ltd and Mangalore Chemicals & Fertilisers Ltd jumped between 7 and 20 per cent.
“United Spirits and Diageo Plc confirm that Diageo is in discussion with United Spirits Ltd (USL) and United Breweries (Holdings) in respect of a possible transaction for Diageo to acquire an interest in United Spirits. However, there is no certainty that these discussions will lead to a transaction,” a notification to the BSE said. Later, Vijay Mallya, the Chairman of the UB Group which owns United Spirits and UB Holdings, told newspersons that both the companies have been holding talks for a long time. To end market speculation on the possible deal, both the companies decided to issue a joint statement, he pointed out.
The statement was issued minutes before the United Spirits AGM was held. At the AGM, Mallya made it clear to the shareholders that he wouldn’t want to take any questions on the details of the deal because of “confidentiality agreement” between the two companies. Mallya is expected to use the money he gets from selling stake to Diageo to clear off part of the debt in USL whose total gross debt is about Rs 8,140 crore. Analysts say that the UB Group wants about Rs 1,600 per share whereas Diageo has offered between Rs 1,200 and Rs 1,300.
KFA, bank meeting
The consortium of 17 banks that have funded debt-laden Kingfisher Airlines Ltd (KFA) will meet in Bangalore on Thursday. The meeting assumes significance, as this would be the first one after the Government revised FDI norms in aviation and allowed foreign carriers to pick up to 49 per cent stake in domestic scheduled airlines.
There are indications that Vijay Mallya will make a presentation to the bankers on the turnaround strategy for the ailing private carrier.
(With inputs from our Chennai, Delhi bureaus.)