New Delhi: Top officials of Diageo Plc and United Spirits Ltd, including its chairman Vijay Mallya, are likely to meet this week to discuss regulatory and other issues related to their proposed $2 billion deal.
The transaction—that would see Diageo acquiring majority stake in United Spirits—is yet to receive green signal from fair trade regulator Competition Commission of India (CCI), which is believed to have concerns about the possible impact on competition in the market once the deal goes through.
According to people close to the development, top officials of Diageo and USL are likely to meet this week in Goa to discuss various issues related to the proposed deal. UB Group chairman Mallya is also expected to be present at the meeting.
Officials are expected to deliberate on issues related to regulatory compliance, including additional costs, among others, they added. Depending on the outcome, there could be more meetings in the future, sources said.
One of the world’s largest spirit companies, USL is part of Vijay Mallya-led UB Group, whose aviation venture Kingfisher Airlines is going through turbulent times.
When asked about status of various regulatory approvals and whether the company has asked USL to take care of expenses related to regulations, Diageo said, “We have received Sebi’s comments and we are considering them”.
The company did not provide further details while similar queries sent to USL did not elicit any response. On 31 January, capital market regulator Sebi had cleared an open offer by Diageo for purchase of 26% stake in USL, which is part of the $2 billion deal. CCI may take some more time before deciding on the Diageo-USL transaction and it has also sought more information from Diageo, say these people. A final decision by the commission is likely in March, they added.
“Regarding the deal, the commission is basically looking at Section 20 (4) of the Competition Act which relates to the impact of a combination to the competition in that relevant market,” they said.