Diageo, United Spirits strike deal
The purchase would be the biggest inbound Indian M&A deal since British oil firm Cairn Energy Plc's sold a majority stake in its Indian business to Vedanta Resources Plc last year. The Diageo deal concludes an on-again, off-again courtship that began in 2008.
Under the terms of the deal, Diageo would eventually get a 53.4 percent stake in United Spirits, although Mallya would remain as chairman and retain a material shareholding which the memo did not specify.
A United Spirits spokesman did not respond to calls seeking comment, while Diageo officials were not available for comment.
The agreement comes after months of haggling and will ramp up Diageo's presence in the world's largest whisky market. The deal would also help Mallya gain much-needed cash to reduce the debt borned by United Spirits and free up funds to revive his grounded Kingfisher Airlines.
"Some of the Mallya group companies have been in turbulence for some time. This is his final opportunity to revive the fortune of the group," said Jagannadham Thunuguntla, head of research at SMC Investments and Advisors Ltd in New Delhi.
Shares in Mallya-controlled companies rose after the Reuters story, with Kingfisher gaining 4.7 percent. United Spirit was up 1.5 percent and United Breweries Holdings Ltd was 2.6 percent higher. By contrast, the benchmark Sensex fell 1 percent.
Soaring temperatures and heat waves have gripped North India, as locals try to beat it by drinking fluids and covering themselves as they drive their vehicles. The effect of the rising temperatures was visible in Allahabad, where scores of people turned up to take bath in the Ganges river to beat the heat.
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