Singapore: Diageo Plc’s talks to buy a stake in India’s United Spirits Ltd have not progressed as the two sides have been unable to agree on details, a senior Diageo executive said on Friday.
“We have been in discussion, but we haven’t yet been able to find a structure that is acceptable to both partners,” John Pollaers, president for Diageo Asia-Pacific, told Reuters in an interview.
“We shouldn’t assume that this will lead to a transaction overall,” Pollaers said. The talks between the two companies began last year.
Diageo, the world’s largest alcoholic drinks group, said in November it was considering a collaboration with United Spirits, the world’s No. 3 spirits maker by volume.
United Spirits said in February it was willing to offer a stake of more than 15% and board representation to Diageo. United Spirits shares extended losses by almost 8% to a one-month low of Rs658 following the news.
Pollaers said Diageo, owner of Johnnie Walker whisky and Smirnoff vodka, will continue to grow strongly in India even if the deal with United Spirits doesn’t materialise.
“We are very positive about our organic growth prospects in India. So we would not preclude ourselves from a transation and we are in discussions, but it may not lead anywhere and our business is strong business in its own right.”
United Spirits chairman Vijay Mallya was quoted by the Times of India in March as saying Diageo and three other global spirit makers had shown interest in buying a stake in United Spirits.
India’s media reports have said United Spirits would use proceeds from the stake sale to reduce debt of $1.2 billion from its purchase of Scottish spirits maker Whyte & Mackay in 2007.
Asia’s drinks sector has seen a flurry of merger and acquisition activity this year. On Thursday, Anheuser-Busch InBev agreed to sell South Korean subsidiary Oriental Brewery to Kohlberg Kravis Roberts & Co. for $1.8 billion.