The High Court of Karnataka in India has annulled Diageo's (DEO) acquisition of control in United Spirits from United Breweries Holdings' following a petition by creditors involved with UB Group, United Breweries' parent company.
Diageo intends to appeal the ruling, with analysts confident that the British spirits provider will eventually prevail. Just under 7% of the shares that Diageo owns in United Spirits are affected by the verdict; in total the U.K. firm holds 26%.
United Breweries was the guarantor of some loans to another UB Group company, bankrupt Kingfisher Airlines. The carrier's creditors want to recover these loans by stopping part of the Diageo deal.