Shares of United Spirits today fell more than 8 per cent amid profit booking after liquor giant Diageo's USD 2 billion buyout of the Indian firm hit a regulatory hurdle.
United Spirits shares plunged as much as 8.43 per cent to Rs 2,400 on the BSE after gaining 8.3 per cent in the previous two sessions. On the National Stock Exchange, the stock tumbled 8.44 per cent to Rs 2,401.
The UK fair trade watchdog yesterday said Diageo's acquisition of United Spirits may lead to a substantial reduction of competition in the supply of blended whisky to retailers.
To address competition concerns, the company offered to sell the bulk of Whyte & Mackay, a subsidiary of United Spirits that supplies whisky and other spirits, including vodka, in the UK.
The Office of Fair Trading will take a fresh look at the Diageo Plc-United Spirits Ltd deal in the wake of the new proposal to sell the bulk of the Whyte & Mackay business.
"We do not expect the sale of W&M businesses to majorly affect USL as Diageo was anyway prepared for this eventuality. Further, the sale would help the company to reduce its overall debt," Angel Broking said in a report.
United Spirits bought Whyte & Mackay for about 595 million pounds (then almost Rs 5,000 crore) in 2007.
In February this year, the Competition Commission of India approved Diageo's purchase of a majority stake in United Spirits in a deal valued at about USD 2 billion.