US: Diageo keeps mum on latest United Spirits talk

The CFO of Diageo has reiterated the company's intention not to be drawn on speculation suggesting that a tie-up with UB Group's United Spirits division is imminent.

The latest reports out of India earlier this week have claimed that a deal will be announced in the coming days. Diageo will pay around US$2bn for a 51% stake in United Spirits, according to Mint in the country. The story, the most recent in an ongoing slew of speculation, cited two UB Group executives and two investment bankers, all unnamed, as its sources.

Speaking to just-drinks on the sidelines of Diageo's investor conference in Miami yesterday (6 November), however, CFO Deidre Mahlan said: “We'll comment on United Spirits when there's something to say.”

When asked about the amount of speculation since Diageo confirmed it has reopened negotiations with UB Group's head, Vijay Mallya, Mahlan said: “We can't control what the media says and does. All we can do is continue to work through the transaction. If we're able to reach an agreement and there's something to report, we'll report it.”

Speaking to reporters late last month, Mallya said that he felt he was "under no compulsion whatsoever" to secure a deal with Diageo, despite the ongoing financial travails at UB Group's Kingfisher Airlines division. “I am not so sure that I lack commercial acumen to the extent that I would sell a hugely thriving, successful business to take the cash and put it into an airline in an environment such as India," Mallya told Reuters.

When asked about Mallya's comments, Mahlan said: “What he chooses to say and how he wants to be characterised is his choice. It doesn't really matter whether I'm comfortable with it or not. He will say what he's going to say and he will say what he wants to say.

“Vijay has a high profile in India and he says what he thinks he needs to say when he's asked a question.”

When asked what Diageo would do should the negotiations with UB Group fail for a second time, Mahlan said: “We will continue to invest in our own business as we have been doing. We've been investing in the region, and we will continue to do that.”