Market research
The reports out of India late last week that the head of The UB Group has been hit with a warrant for his arrest will have been greeted with raised eyebrows by many in our industry – not least, by those of you who work for Diageo.
I'm not going to throw fuel on the flames, here: I'm quite sure that this is a case of political gesturing by the authorities in Hyderabad rather than Vijay Mallya being cast as The Fugitive. Whatever, the news serves as a strong reminder to just how unpredictable things can be in India.
I don't think it's unfair to describe Diageo as a conservative company, when it comes to spending its money – I'm pretty sure the firm would take such a 'charge' as a compliment. So, questions will certainly be asked on the sidelines of the ongoing negotiations between the London-based drinks giant and The UB Group, over a stake purchase of the latter's United Spirits division.
The Indians will, I'm sure, be playing down the matter; they're probably describing it as “a misunderstanding”. And, while I imagine Diageo will accept this as being the case, it certainly won't appreciate the kind of headlines the warrant has generated in the last few days.
The matter will not play a part in the negotiations, but it does certainly serve as a timely reminder to Diageo of the strong element of uncertainty that comes with an emerging market like India.
You can be assured, then, that Diageo's negotiators will be earning their keep as they check the finer details of any transaction between the two firms.
Sectors: Emerging markets – BRIC, Mergers & acquisitions, Spirits
Companies: Diageo, The UB Group, United Spirits Limited
