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India’s ‘King of Good Times’ Puts His Realm at Risk

Originally posted on The Wall Street Journal

Times are tough for India’s “king of good times.”

Vijay Mallya’s United Spirits Ltd. and Kingfisher Airlines Ltd. have made him one of India’s wealthiest and most-recognized businessmen — an image he cultivates with a Formula One auto-racing team, parties with Bollywood actors and liberal use of his nickname. Yet this week, with his airline logging millions of dollars in losses and United Spirits’ liquidity dropping sharply, Mr. Mallya and his partners put some of their own shares on the line to keep both businesses afloat.

Now, in a risky maneuver, Mr. Mallya is looking to cede a major portion of his liquor kingdom to a rival: Britain’s Diageo PLC. While a deal could extend Mr. Mallya’s reach and help him tighten his grip on India’s liquor industry, it also could make him vulnerable to an internal threat from a well-heeled foreign competitor.

Diageo and Mr. Mallya (pronounced MAHL-yuh) have been discussing a deal in which the world’s largest spirits maker by sales could buy anywhere from 14% to 35% of Bangalore-based United Spirits, a person familiar with the talks says. Based on United Spirits’ current market capitalization, a 35% stake would be valued at about $430 million.

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