Diageo share price: Indian court annuls purchase of United Spirits shares

on Dec 22, 2013
Updated: Oct 21, 2019

iNVEZZ.com Sunday, December 22: An Indian court has annulled the sale of some shares of United Spirits to Diageo (LON:DGE), delaying the London-based group’s bet on the Asian country.

Both Diageo and United Breweries Holdings, which sold the United Spirits shares, said they are still examining the decision by the High Court of the southern state of Karnataka. The companies are determined to appeal.
“We will take all necessary steps to protect Diageo’s interests as well as our own,” said billionaire Vijay Mallya, who heads the Indian brewer that sold the shares.

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The ruling adds another complication to the Diageo’s attempt to increase its foothold in India’s growing spirits market. According to analysts the deal is unlikely to be torpedoed considering the prospects of appeal, including the Supreme Court, and previous approvals by regulatory authorities.
“This court order can cause only minor hiccups in the deal,” said Deven Choksey, managing director at K R Choksey Securities, as quoted by Reuters.

Diageo completed its acquisition of a 25 percent stake of United Spirits in July, some eight months after the companies announced the deal because of regulatory hurdles. At the heart of the problems is bankrupt Kingfisher Airlines, whose grounded operations owe 60 billion rupees to creditors as of September. United Breweries Holdings was a guarantor for some of the loans and creditors have sought to recover their funds by trying to stop the deal with Diageo.

If the court’s judgement stands it would leave Diageo with just 16 percent of the Indian company.
**Diageo launches new website to give advice on selling alcohol**

Diageo and Pubs of Ulster have launched a new website named Smart Serve with the purpose of helping small shop and bar owners sell and serve alcohol responsibly.
The website’s guidelines include enforcing the legal drinking age, preventing drunk driving and creating a safe environment.
Head of responsible drinking at Diageo Ireland, Gemma Bell, said: “We know how important partnering with our own customers is at that point they meet with consumers in shops or bars around the world…That is why we have invested in creating Smart Serve.”
**Analysts on Diageo**
JPMorgan Chase & Co reiterated its ‘overweight’ rating and 2,050.00p price target on Diageo’s shares in a note sent to investors on Friday.
Two equity analysts rate Diageo’s stock as a ‘sell’, 11 give it a ‘hold’ rating and 23 call it a ‘buy’. The company has a consensus rating of ‘buy’ and an average price target of 2,161.83p.
**As of Friday, December 20 buy Diageo shares at 1,950.32p.**
**As of Friday, December 20 sell Diageo shares at 1,950.30p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.


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