The price of RS 1,440 per share, at which Diageo agreed to buy United Spirits’ (USL) shares from Vijay Mallya's UB Group, did not represent the true market value and the transaction needed to be properly valued, the Karnataka High Court observed last month while passing an order annulling the stake sale between United Breweries Holdings (UBHL) and Diageo.
The court, among other observations, noted that the sale should not have been allowed by the company court in May 2013 without an investigation into serious allegations by petitioners that USL had diverted R4,000 crore to an overseas subsidiary.
Both UBHL and Diageo have said they intend to move the Supreme Court against the December 20 ruling which annulled the transaction.
"In a transaction of this nature when the company was divesting its substantial portion of the shares which has resulted in acquiring controlling interest by the purchaser, the valuation by an approved valuer should have been insisted upon,” the court said in its order. During arguments last month, Diageo's counsel had presented data to prove that the price agreed upon was fair.