Could United Spirits come to the rescue of Vijay Mallyas UB Group?

Could United Spirits come to the rescue of Vijay Mallya's UB Group?

United Spirits may be forced to consider teaming with a multinational drinks partner to fend off the financial pitfalls facing its parent company, The UB Group.

The division, which has lost half of its stock value in the last six months, has seen its sales volumes rise by 12% in the same period and appears to be the white knight to UB Group's woes. The parent company's Kingfisher Airlines is close to bankruptcy and some local reports have suggested that the airline could have its licence revoked. UB Group is also dealing with US$1.5bn of accumulated debt.

Speaking to just-drinks earlier this week, a domestic drinks industry observer who preferred to remain anonymous, said: “There is a definite possibility at this stage that the company could accept an international partner (for United Spirits)." Diageo and Bacardi could both be potential suitors, the observer speculated.

Should United Spirits side with Diageo, the UK-based drinks giant would be in a strong position to secure beneficial terms: Back in 2009, the two companies concluded discussions over a possible stake purchase in United Spirits, with valuation proving the main sticking point. Outside investment has long been sought by United Spirits in an attempt to pay down debt.

Speaking to just-drinks in September last year, Mallya was his usual ebullient self, claiming that he would be “very interested” in partnering with another drinks firm to make a move for US spirits producer Beam Inc at some point in the future.