Fair trade regulator Competition Commission of India (CCI) is believed to have expressed reservations over Diageo’s proposed Rs 11,166-crore purchase of a majority stake in UB Group's United Spirits Ltd (USL), as it has found certain clauses of the deal to be based on probabilities and not definitive in nature.
CCI, whose approval is necessary for all major mergers and acquisitions involving Indian companies, is the second regulator after market watchdog Sebi to express its reservations over this deal.
CCI is not comfortable with the deal terms that provide for the existing promoters of USL giving a preferential treatment to Diageo, if it fails to get the required number of shares from public shareholders through an open offer, sources close to the development said.
The anti-trust regulator has asked the companies to rework the ambiguous parts, sources said.
Adding that CCI might even send back the application, if the companies fail to satisfy its concerns. At the same time, Sebi (Securities and Exchange Board of India) has also expressed reservations about the preferential allotment of shares to acquirers if the open offer fails to elicit desired response from non-promoter shareholders.
