$2 bn Diageo-USL deal likely this week

Britain\'s Diageo Plc is set to pick up a 51 percent stake in Indian liquor baron Vijay Mallya\'s United Spirits this week in a transaction worth around $2 billion, a newspaper reported on Tuesday. The deal would involve the direct purchase of a portion of Mallya\'s holding, the issue of fresh shares and an open offer to buy stock from public shareholders, India\'s Mint business daily said. The report sent shares of United Spirits up 3.09 percent to 1,257.30 rupees on the Bombay Stock Exchange. United Spirits\' share price has risen sharply this year on speculation about a stake sale. The newspaper quoted two unidentified UB Group executives and two investment bankers who said the takeover was likely to be announced later this week. United Spirits\' parent United Breweries said it was not commenting while Diageo said it was not making any statement beyond one issued in September. In that statement, Diageo, makers of Johnnie Walker whisky, said it was in talks with United Spirits and parent United Breweries (Holdings) to potentially \"acquire an interest in United Spirits\". But an executive familiar with the discussions, who spoke on condition of anonymity, told AFP that while a \"deal makes sense, there is still no certainty\". The newspaper said it was unclear what stake Mallya would have in United Spirits after the deal and whether it could mean an infusion of funds into his cash-strapped Kingfisher Airlines. Last month, India\'s aviation regulator suspended the flying licence of the debt-laden airline, citing safety concerns. The airline has not flown since October 1 following a pay dispute with workers that has since been resolved. Mallya has said he will present a \"comprehensive\" plan to the government to revive the carrier whose licence is due to expire on December 31. The flamboyant tycoon holds a 27.78 percent stake in United Spirits, maker of McDowell\'s whiskey. He would remain chairman but other management would be named by Diageo, according to the newspaper report. Diageo is looking at United Spirits to gain a stronger presence in India\'s lucrative spirits market where it trails global rival Pernod Ricard of France, analysts say.