Diageo exploring option to delist United Spirits?

After Vedanta, United Spirits could be the next in line seeking to delist from the bourses. Diageo, the British liquor giant holding roughly 56 percent stake in United Spirits through its Indian arm, is exploring the option of buying out minority shareholders and delisting the company, CNBC-TV18 learns from sources familiar with the matter.

Sources said Diageo has initiated talks with investment bankers and consultants seeking advice on a delisting offer.

"The investment bankers will be giving a proposal and advising on the benefits, timing, and pricing of the offer," said a senior executive who did not want to be named.

"The proposal will be sent to the global management. If the management approves, the proposal will be sent to the board. Only after board approval will it will go to the India board of United Spirits for approval," the executive said.

"The management believes that the current market conditions and the pricing of USL is conducive to a delisting and that's why they are exploring this option," the executive said.

Diageo has over the last four years has been steadily increasing its stake in United Spirits.

"The global team is very bullish on India and that is why they are willing to invest significant capital into delisting the company. The price discovery in this case is tricky given the current market condition. The team will be very careful of the timeline to ensure that it is a successful offer, if and when they do delist the company;" said a second source.

Despite the disruption caused by the COVID 19, the company is hopeful of a bounce back and led by strong demand.

"The delisting will allow Diageo to streamline business in India and bring it under the Diageo brand profile," the source said.

When contacted, a spokesperson from Diageo said, "As a policy we do not comment on market rumour and speculation".