Diageo, United Spirits Ltd deal to boost premium liquor brand market: CCI
After seeking clarifications and changes four times in a proposed acquisition of majority stake by UK-based Diageo in UB group's United Spirits Ltd, fair trade regulator CCI has ruled that the deal would give a boost to entry of premium brands in alcoholic beverage market.
"Diageo's acquisition of USL may give a boost to the premiumisation strategy...The combination may increase and improve consumer choice," Competition Commission of India (CCI) has said.
CCI, in an order dated February 26, has approved Diageo Plc's proposed majority stake purchase in Vijay Mallya-led United Spirits, saying the deal would not have adverse impact on competition.
Sebi, last month, cleared by the deal after numerous clarifications sought by the regulator and the subsequent representations made to it in this regard.
The proposed transaction worth about USD 2 billion would provide much needed cash for Mallya's UB group, whose aviation venture Kingfisher Airlines is facing turbulent times.
Under the deal, Diageo would acquire up to 53.4 per cent stake in United Spirits, one of the largest spirits firm, within five years.
Approving the deal, CCI said the proposed combination is not likely to have an appreciable adverse effect on competition in India.
The Commission noted that United Spirits and Diageo are mostly present in different price spectrums in the branded spirits market with negligible overlap between their products in each of the branded spirits segment.
"... the proposed combination may bring new products and more variants of the existing brands at different price points
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