SPIRITS giant Diageo pledged yesterday to fight an Indian legal decision that has stalled a deal giving the British group control of United Spirits, the country’s biggest drinks business.
The court made the decision last Friday in response to a petition by creditors involved with the transaction.
Diageo and United Breweries, the Indian holding firm that sold its shares in United Spirits (USL) to the British company, both said they planned to appeal the decision.
The deal has been caught up in a separate legal battle involving India’s Kingfisher Airlines. Kingfisher and United Breweries are part of Indian business magnate Dr Vijay Mallya’s corporate empire.
The airline has been grounded since 2012 and is unable to pay off its loans, with United Breweries becoming a guarantor for its debts. Kingfisher creditors trying to get their money back petitioned for the deal between USL and Diageo to be stopped.
Diageo said in a statement: “We are disappointed, as a bona fide purchaser for value of the USL shares, that we have been brought into the private dispute between Kingfisher Airlines and its creditors. Once we receive the full written order of the Court of Appeal, we will review the detail of that order.”
Drinks analysts were sceptical that the legal decision would derail the deal. “This court order can cause only minor hiccups in the deal,” Deven Choksey, managing director at KR Choksey Securities, said.
In November 2012 Diageo said it was buying a majority stake in USL for £1.28bn . The deal would give Diageo a 53.4 per cent share in United Spirits. Without the transaction, Diageo’s stake in USL would be 19 per cent.