LONDON -- Reports emerging suggest that Diageo's (DGE -1.92%) (DEO -0.07%) long-awaited purchase of a large interest in United Spirits has failed, according to a person "familiar with the deal."
The deal originally proposed that Diageo will buy a 26% share in the Indian spirits company through a combination of share purchase from existing promoters and preferential allotment of shares, totalling close to 38 million shares Rs 1,440 apiece.
However, it is understood that only 65,000 shares were tendered in, with the stock currently a premium of 44% over the offer price at 2,077 a share. As yet, there has been no official confirmation from either party.
This development is the latest in a long line surrounding the bid. Back at the beginning of March, the Indian Competition Commission approved its 1.28 billion pound purchase of a stake in United Spirits after Indian authorities questioned whether a put clause in the agreement was compliant with local legislation, following initial concerns that the deal would have an adverse impact on competition.
Since then, mid-April saw Diageo report slowing growth in its third-quarter interims, although the quarter did see a strong price/mix, boosted by price increases taken on U.S. spirits brands since May 2012. The shares have dropped 6% since reaching an all-time high last month, and currently yield around 2.2%.
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