Mallya-Chhabria truce hints at United Spirits nearing deal with Diageo

Indications are that Vijay Mallya may be nearing a deal to sell United Spirits stake to Diageo. His out-of-court settlement with Kishore Chhabria is pointing to such an eventuality, brokerages have said.

"We believe, this is being done by UNSP (United Spirits) because it is one of the conditions for its ongoing deal with Diageo Plc of UK. Diageo wants UNSP to settle all pending litigation before entering into a stake sale arrangement with UNSP," Kim Eng India said in its morning note today.

The likely deal has propped up United Spirits shares. The stock is up 5 percent at Rs 1,240 on the BSE.

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The likely deal has propped up United Spirits shares. The stock is up 5 percent at Rs 1,240 on the BSE. AFP[/caption]

The out-of-court deal will bury the legal disputes with his arch rival Kisjor Chabria which has been going on since 1991 ever since Mallya took over Shaw Wallace owned by Kishore Chhabria's late brother Manu Chhabria and during that transaction Kishore Chhabria had laid claim to 'Officers's Choice.'

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United Spirits will now give up ownership claims over Officer's Choice, the largest selling whisky brand in India, and rival company Allied Blenders & Distillers (ABD) in which Chhabria owns over a 95% stake.

According to reports, Mallya's United Spirits will be getting a nominal sum Rs 8 crore as an one time fee from ABD to settle that issue once for all.