An Indian court has annulled the sale of some shares of United Spirits Ltd. (532432.BY) to Diageo PLC (DEO) , further delaying what was originally supposed to be a $2 billion deal to give the British company control of some of India's most popular booze brands.
Both Diageo and United Breweries Holdings Ltd. (507458.BY) -- the Indian brewer headed by billionaire Vijay Mallya which sold the shares--said they are still studying the Friday decision by the High Court of the southern state of Karnataka, but that they do plan to appeal.
"We will take all necessary steps to protect Diageo's interests as well as our own," said Vijay Mallya chairman of the UB Group which controls United Breweries.
Since last year, Diageo has been trying to acquire a controlling stake in United Spirits, but the acquisition has run into a number of regulatory and legal barriers.
The latest trouble comes after companies that have lent money to United Breweries went to court to stop it from selling its United Spirits shares to Diageo because it still owes them money. United Breweries was a guarantor for some of the debt left by Kingfisher Airlines Ltd. (532747.BY), another UB Group company which has been grounded, unable to pay off its loans.
Diageo said that only part of the 26% stake it now owns in United Spirits is affected by the court's decision.
"We do not believe that there are any grounds for declaring the sale of the (6.9% of the) shares in United Spirits Ltd. purchased by Diageo on 4 July 2013 from United Breweries (Holdings) Ltd. as void," the company said in a statement. "We are disappointed to hear that the court has over-ruled the previous order of the High Court of Karnataka," which approved the share sale, it said.
Write to Eric Bellman at eric.bellman@wsj.com
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