The worlds largest alcoholics drinks maker, Diageo, is in advanced talks to buy a stake in Indian outfit United Spirits, four people with knowledge of the matter have told Bloomberg.
Such a transaction would fit in well with Diageos strategy of increasing its portfolio of emerging market assets; in fact, the company already has operations in the South Asian country.
Diageo, valued at £43bn, tried to acquire a stake in United Spirits, valued at £1.5bn, back in 2009 but failed after it was told that its offer was not at fair value.
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So, what may have changed this time around? According to the news agency one of United Spirits' main shareholders, Vijay Mallya, needs to plug a large financing gap - of around £370m - in another one of his holdings, airline Kingfisher.
Significantly, as part of the deal, which is yet to be finalised, Diageo may get the right to appoint a majority of United Spirits' board members, including the Chairman, one person said.
The two companies may announce a deal by next month, said one of the people.
United Spirits' shares have doubled this year, and yet profit in the three months ended June 30 rose by just 5.3% while sales did so by 6.3%. Over at Diageo meanwhile sales grew 24% in the country in the year through June 30th, the company said, driven by "strong momentum across the Scotch portfolio."
A spokesman for United Spirits has denied the speculation.
As of 15:09 shares of Diageo are falling by 0.7% to the 1708p mark.
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