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Diageo eyes stake in United Spirits

Diageo is reportedly closing in on a deal with Vijay Mallya for a stake in his struggling UB Group.

Vijay Mallya

Talks are said to be at and “advanced stage” with a deal expected to emerge by next month, which could allow Diageo the right to appoint the majority of United Spirits’ board, including the chairman.

Diageo is said to be looking for a 27% slice in United Spirits and further reports, given by unnamed sources to Bloomberg, suggested that parts of Whyte & Mackay’s Scotch whisky range may also be up for grabs.

The two companies apparently considered a similar deal back in 2009 but could not agree on terms.

UB Group ran into difficulties earlier this year when its Kingfisher Airlines wing began to struggle.

The airline requires US$600 million in the next few months if it is to survive.

Neither company has made a statement on the matter.

The advantages for Diageo in any such deal would be considerable, not least because it gives the drinks giant a crucial entrance to the notoriously difficult Indian market – a spirits market expected to grow to $45bn by 2015.

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