Diageo has said that it is still in talks with United Spirits over the the acquisition of a stake in the Indian drinks giant, following a report that negotiations have stalled.

Talks are ongoing with United Spirits, which is part of billionaire Vijay Mallya's UB Group, a spokesperson for Diageo told just-drinks today (11 May).

However, the drinks giant repeated its previous statement that there is "no certainty" that a deal will be signed.

The clarification comes after Jon Pollears, president of Diageo Asia Pacific, told Reuters last week that the two firms have so far failed to agree on the structure of any tie-up.

Shares in United Spirits slipped by nearly 7% on Friday (8 May), while Diageo's share price fell by 1%, upon investor concerns that a deal will not be reached.

Separately, just-drinks understands from sources close to the situation that the progress of negotiations has been slow. It is believed that one of the main barriers to a deal is the issue of how much control each party would have in any venture.

United Spirits president Vijay Rekhi told just-drinks last month that talks with Diageo were still on, but declined to comment on the progress of negotiations. "We have said that we are in talks and those talks are continuing," he said.

Rekhi confirmed that United Spirits has also received interest from other parties, although he did not name specific companies.

Reports out of India have speculated that United Spirits, which controls more than two thirds of India's spirits market and benefits from UB Group's nationwide distribution network, may be willing to offer Diageo an initial stake of 15%.

United Spirits said last month that case sales for the year to the end of March rose by nearly 20% to 88m. Net profits slipped to INR556m (US$11m) for the three months to the end of March, down from INR651m during the same period last year.

Earlier this year, Diageo CEO Paul Walsh said that talks with United Spirits remained in the "preliminary stages".