UB Group and Diageo in Talks for Stake Purchase as Share Prices Surge
Vijay Mallya will be a concerned, and busy man too. The much talked about meetings between the UB Group and UK based Diageo are now underway, with relation to buyingstakes in the UB subsdiary company, United Spirits. The news of this development seems to have spread far and wide, and pushed the stocks of United Breweries by as much as 20%, to land at Rs 132.45 on the National Stock Exchange (NSE). Known to be of much intensity, this deal will seal the fate of the Vijay Mallya owned enterpise, and the man himself as the head of the United Spirits.
As per an official communique from the firm, ” United Spirits and Diageo PLC confirm that the UK-based company is in discussion with it and United Breweries Holdings in respect of possible transactions to acquire an interest in the liquor firm.” Everyone has been waiting for a new investment in the Mallya owned company, as a majority of it’s stakeholders feel that the investment just solve the debt crisis of the airlines division, Kingfisher which has never made a profit since establishment in 2008.
With most creditors not satisfied with the collaterals Vijay Mallya recently produced before them, a more concrete step was awaited to ensure that the financial future of the ailing enterpise may be more sound.
But the deal, as industry specialists say, wont be an easy one. Vijay Mallya holds the liquor business close to his heart as under the enterprise, he had managed to buy big names like Whyte & Mackay, taking it to a world leading position. Also, if Diageo gets majority stake, they would want majority control which Mallya wont give in to easily, but also poses a threat for Diageo who could be having a monopolistic market market ready at hand, in the liquor industry. Till anything meaningful turns out, everyone will be waiting with baited breath as to what compromise the entities come to.
News source: Daily Bhaskar
Earlier posts on United Spirits / United Breweries