The Indian owning company of Kingfisher Airlines is once more in talks to off load part of its booze empire, possibly to raise cash to save the group’s airline.
Following months of rumours, Vijay Mallya’s United Breweries Holdings, which along with a subsidiary company owns 28% of United Spirits, said on Tuesday it was back in talks with Diageo about selling part of its stake.
It is the second time Diageo has taken aim at United Spirits, the leader in India’s lucrative spirits market.
The rumour mill has been swishing around Diageo and United Spirits for several months as market watchers in India suggested Mr Mallya could cash in part of his holding to prop up his ailing Kingfisher airline.
On Friday, it emerged that renewed talks between Diageo and United Spirits, which owns Scotch whisky brands such as Whyte & Mackay and Jura, were reaching a more advanced stage.
Diageo is understood to be eyeing a stake of up to 25% in United Spirits, with a view to gaining strategic control.
Both companies have been careful to stress that there is “no certainty” discussions will lead to a deal. But, forDiageo, the potential prizes on offer are vast
India’s middle class, which currently accounts for 13% of the population, will boom over the next 15 years to more than 60%, according to estimates. Analysts believe this will fuel further rapid expansion in India’s branded spirits market, currently worth about £2.7bn.
Back in 2008, India’s so-called “King of Good Times”, Mr Mallya, was quick to talk about his various business ventures, ranging from spirits to aviation and fertilisers. Today he is much quieter and is fighting to save his pet project Kingfisher Airlines.
According to an interview with the UK Telegraph, the gold-clad billionaire once described his now beleaguered airline, Kingfisher, as the “Harrods of the sky” and boasted to the newspaper how he picked his air hostesses himself for their “height” and “figure”, among other attributes.
Today he is hard pressed to get his pilots to fly and gain enough leeway with creditors to keep the airline aloft.