Diageo merger talks in India put on hold

Drinks firm Diageo today said talks to buy a stake in India's United Spirits stalled.

John Pollaers, president for Diageo Asia-Pacific, said: "We haven't yet been able to find a structure that is acceptable to both partners. We shouldn't assume that this will lead to a transaction overall."

India and China are major growth areas for Diageo as growing prosperity boosts demand for its brands such as Smirnoff vodka and Johnnie Walker whisky.

Talks between the two companies began last year. Diageo, the world's largest alcoholic drinks group and owner of Guinness, said in November that it was considering a collaboration with United Spirits - the world's third-largest spirits maker by volume.

United Spirits said in February it was willing to offer a stake of more than 15% and board representation to Diageo.

Pollaers said Diageo, which yesterday posted a fall in first-quarter sales of 7%, will grow strongly in India even if the deal with United Spirits does not materialise.