World's largest spirits maker Diageo maybe looking to acquire more than the earlier reported 15% stake in Vijay Mallya's United Spirits (USL). Diageo may acquire a 15% stake and then go for an open offer to buy additional 20% stake, reports Economic Times. If this happens, then Diageo may end up with a stake as high as the company's promoter, the UB Group. Both the entities will end up holding around 35% stake in the firm. UB Group presently holds a 37% stake in USL, which will fall to 34% once the merger with Shaw Wallace & Co is completed.

Earlier reports had said that Diageo will acquire a 14.99% stake in USL and appoint two representations on company's board. Also Diageo, maker of Johnnie Walker whiskey and Smirnoff Vodka, and USL were expected to form a distribution partnership in the Indian market.

The deal may involve offloading of treasury stocks by USL, which were generated from the overlapping capital of merger of McDowell & Co and Herbertsons. These shares amount to a 17% stake in the company. Mallya is not expected to offload any shares.

UB Group's recent acquisitions have been funded by debt, including the $827million acquisition of Whyte & Mackay. The deal will help UB deleverage its balance sheet. Mallya has also reportedly pledged bulk of his shares in USL to institutions like IDFC, IL&FS, Citigroup and ICICI Bank to fund Kingfisher Airlines.

USL and Diageo have been in exclusive talks since November last year, meaning USL cannot entertain any other suitor(s) till the time, talks with Diageo end. Other international spirit makers like Bacardi had also expressed interest in USL. Last year Diageo was also in talks with Cobra Beer, founded by India-born beer baron Karan Billimoria, but the talks failed due to differences over valuation.

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