The world's largest spirits maker Diageo has reached a deal with Indian liquor baron Vijay Mallya's UB Group to buy a stake in United Spirits, the Press Trust of India news agency reported late Thursday.
The agreement could be announced Friday, the Indian news agency quoted unnamed sources as saying, while Indian television channels reported Mallya flew to London on Wednesday, accompanied by UB executives, to discuss a deal.
Britain's Diageo Plc has been engaged in talks to acquire a stake in United Spirits to gain a stronger presence in India's lucrative spirits market where it trails global rival Pernod Ricard of France.
The Press Trust of India said no other details were available about the deal but earlier this week India's Mint business daily said Diageo was set to pick up a 51 percent stake in United Spirits in a transaction worth around $2 billion.
The transaction 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, Mint said.
A UB Group spokesman declined to comment on the Press Trust of India report while no response was immediately available from Diageo, whose previous talks with Mallya to acquire a stake in United Spirits fell apart in 2009.
In September, Diageo -- makers of Johnnie Walker whisky -- announced it was in discussions with United Spirits and parent United Breweries to possibly "acquire an interest in United Spirits".
Mint newspaper had said it was unclear what stake Mallya would have in United Spirits if the deal went through.
The money from the sale could allow Mallya to reduce United Spirits' hefty debt and inject 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.
Mallya has said he will present a "comprehensive" plan to the government to revive the carrier, whose licence expires December 31.
United Spirits, whose shares have surged on expectations of a deal with Diageo, is the flagship company of Bangalore-based UB Group and sells such brands as Bagpiper and Royal Challenge in India.
Mallya would remain chairman of United Spirits but Diageo would take control of managing the company, Indian media reports said.