Mallya extends olive branch to Diageo

Flamboyant Indian businessman Vijay Mallya has said that he would be willing to end the months of conflict with Diageo by stepping down as United Spirits chairman if he was offered a “palatable settlement”.

Mallya has offered to step down as USL chairman if Diageo makes him an “palatable” offer (Photo: Wiki)

He has told reporters he would step down as non-executive chairman of United Spirits if the world’s biggest premium spirits company offered him a “clean break”.

In 2013 and 2014 Diageo bought a 54.78% stake in USL with Mallya’s blessing but since then both sides have been at loggerheads with Diageo seeking to oust him. Mallya insists Diageo has a contractual obligation to allow him to remain.

In April last year the Diageo controlled USL board demanded Mallya’s resignation following receipt of a detailed report from PwC, which said it had uncovered evidence that USL funds had been improperly diverted to other Mallya companies (notably his collapsed Kingfisher airline) when he controlled the company.

Those allegations are now under investigation by India’s financial authorities to whom Mallya continues to protest his innocence.

“If the [USL] board had come to me and said you had a long innings and now that Diageo is in control we would like to replace you as chairman, I would discuss amicable terms with Diageo”, he told the Wall Street Journal. “But I was requested to step down directly following the PwC report. Therefore, my departure, if I had agreed to it, would have been almost an admission.”

“I have an emotional connection to USL and I want the company to proper and grow and I would not like the management and board to be distracted by all these issues,” he continued. “It is in the interests of both parties to arrive at a mutual settlement as soon as possible”.

Last week it was reported that Diageo had been forced to pay £93m after it guaranteed a bank loan on which Mallya defaulted for a second time.

It will seek to recover those funds from Mallya who, in turn, is threatening to counter-sue Diageo for failing to enter a joint venture with him in South Africa.

Diageo says there was no binding agreement, only that it undertook to “consider” the proposal.