Diageo’s Indian deal hits delay but African venture advances

Diageo’s £1.2 billion deal to acquire a majority stake in United Spirits has been held back by Indian regulators, but the company confirmed a new African joint venture with United’s owner VJ Mallya.

red tapeThe UK-based drinks giant agreed to buy a 53.4% stake in Vijay Mallya’s United Spirits firm in November, with the original aim of completing the purchase by the end of March.

Earlier this month, the initial tender offer timetable was pushed back and Diageo is now understood to be caught up in protracted discussions with the Securities and Exchange Board of India (Sebi) about whether a put clause in the agreement complies with Indian laws.

The put clause would leave the door open for United Spirits to sell further shares to Diageo at a later date. However, Sebi officials are thought to have raised concerns about whether this constitutes a forward-looking contract, which is not permitted under Indian law.

In addition to this scrutiny from Sebi, the Competition Commission of India continues to express reservations about parts of the agreement it believes are too ambigious, describing the deal as a “work in progress”. Spectators now believe the transaction will be pushed back into the second quarter of the year.

Against the backdrop of these delays, Diageo announced today that it has entered into a joint venture with Mallya to acquire the firm that owns United National Breweries’ sorghum beer business in South Africa.

Having originally announced plans for the deal in November, Diageo has now confirmed its purchase of a 50% stake in the firm for US$36m (around £23m). The remaining 50% of the business will be held by a company affiliated to Mallya.

Although this deal also remains subject to approval from local competition authorities in South Africa, it is expected to complete in the first half of 2013.

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our newsletters

Sales Administrator

Les Caves de Pyrène
Guildford, UK

General Manager

3Cs Cider
UK

Brand Manager

Hallgarten Druitt
Luton, UK

Brand Manager

Kilchoman Distillery Co Ltd
Edinburgh, UK

Wine Bar Supervisor

Henny's
London, UK

Partner Manager - On-trade - North West

Maverick Drinks
Manchester, UK

Partner Manager - On-trade - Scotland and NE

Maverick Drinks
Edinburgh, UK

Head of Marketing

Berkmann Wine Cellars
London, UK

Business Development Manager

Harviestoun Brewery Limited
Scotland - Central Belt

Cask Buyer

Atom Brands
Tonbridge, UK

Pays d'Oc Tasting

London,United Kingdom
28th Jun 2018

CHILE: From The Very Top To The Downright Hot

Manchester,United Kingdom
2nd Jul 2018

CHILE: From The Very Top To The Downright Hot

Edinburgh,United Kingdom
3rd Jul 2018
Click to view more

Champagne Masters 2018

Deadline : 22nd June 2018

The Global Malbec Masters 2018

Deadline : 1st July 2018

Click to view more

The Global Malbec Masters 2017

the drinks business is proud to announce the inaugural Global Malbec Masters 2017

The Global Sparkling Masters 2017

the drinks business is thrilled to announce the launch of The Global Sparkling Masters.

Click to view more