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Diageo bids for 26% more of United Spirits

Diageo should gain greater exposure to the Indian markets as it looks to take control of United Spirits.

All trading involves risk. Losses can exceed deposits.

India is the largest consumer of whisky in the world, consuming 1,350 million litres a year. However, due to its particularly high import taxes, only 1% consumed is imported from the home of whisky; Scotland. In an effort to address this situation, Diageo has acquired a 28% stake in India-based drinks manufacturer United Spirits, and is now trying to gain control of the firm with a £1.1 billion bid for a further 26% of the company.

The move has seen the competition commission investigate its market share, and has instigated the sale of a majority-holding Diageo had in Glasgow-based distiller Whyte & Mackay. These new developments could well see Diageo dispose of its entire holding in the distiller.

The news of the acquisition of United Spirits has come out just before the end of the company’s third quarter, and shares have drifted slightly as a result. In the last 48 hours the share price has managed to pop above the mid-February high of 1920p, and at the same time break through the 100-day moving average. If it can close above this level its next target will be the January highs of 2000p.

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