In a breather for liquor baron Vijay Mallya, the Competition Commission of India is understood to have given its approval to the Rs 11,167-crore United Spirits-Diageo Plc deal.
Official and lawyer sources confirmed that the deal, which needed the fair trade regulator’s approval, has been cleared on Wednesday.
The Commission did not comment on the development.
The country’s largest spirits company USL is part of Mallya’s UB Group, whose aviation venture -- Kingfisher Airlines – is in a financial mess. The conclusion of the deal could provide a life-line to the now grounded Kingfisher Airlines, which owes Rs 7,000 crore to a consortium of 17 banks.
“The Commission went through the clarification submitted by the parties and has given its formal approval and an order on the same will be issued shortly,” sources told Business Line.
As part of the deal, British liquor major Diageo would acquire 27.4 per cent stake for Rs 5,725.4 crore through a combination of share purchase from existing promoters and preferential allotment of shares.
In addition, it had offered to acquire an additional 26 per cent stake for Rs 5,441.07 crore through an open offer for public shareholders. The Commission had earlier asked USL-Diageo to rework the ambiguous parts and make the deal more “definitive” in nature.
Besides this, the fair trade regulator had also asked the companies to provide key information including prices and shares of the company’s products and those of its rivals
The anti-monopoly watchdog had also said that it was not comfortable with the deal terms that provided for the existing promoters of United Spirits Ltd giving a preferential treatment to Diageo, if it fails to get the required number of shares from public shareholders through an open offer. USL controls over half of India’s 250 million cases liquor market and owns brands such as McDowell’s No.1 and Bagpiper.
The CCI had sought additional details to ensure that the deal does not create monopoly in the market.
The two companies had entered into a deal in November last.
Earlier, capital markets regulator Securities and Exchange Board of India, on January 31, approved Diageo's open offer for acquiring 26 per cent stake in USL.
The offer is part of the overall deal.