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Vijay Mallya will remain chairman of India’s United Spirits after Diageo bought a controlling stake.
Vijay Mallya will remain chairman of India’s United Spirits after Diageo bought a controlling stake.
(AIJAZ RAHI/AP)

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Diageo takeover model faces higher hurdles in India

A marriage of convenience or the start of a long-term relationship? Diageo shareholders will be hoping for the latter as their company buys up to 53 per cent of United Spirits of India for £1.3-billion ($2.1-billion). The deal will give Diageo control of the market leader in India, where alcohol sales are growing 15 per cent per year and the middle classes are developing a taste for upmarket brands. It also has attractions for Vijay Mallya, who is selling part of his United Spirits stake to Diageo. His Kingfisher Airlines business is in deep trouble, so the cash injection will come in handy even if it will not, on its own, solve the airline’s problems.