United Spirits, the Indian whiskey maker controlled by Vijay Mallya, saw share prices fall the most in eight months in Mumbai trading on speculation that discussions to sell a stake to Diageo could fall through.
United Spirits shares fell 9% to close at 1,095 rupees (€15.66), the biggest fall since Feb 22. The stock was the biggest loser on the 10-member BSE Fast-Moving Consumer Goods Index.
"I do not have to do a deal with Diageo at all. I am under no compulsion whatsoever," Mr Mallya, the company’s chairman, was quoted as saying in a report over the weekend.
Diageo, the maker of Guinness, said last month that it was in talks to buy a stake in United Spirits, a deal that would help the world’s biggest distiller build its presence in the Indian whiskey market. United Spirits shares have more than doubled this year on expectations of a deal.
"It’s more of the rumours about the deal with Diageo not going through," said Ganesh Ram, an analyst at Kim Eng Securities. "The deal is important from the United Spirits perspective because it would give them the edge of reducing debt as well as the edge of new premium brands."
Mr Mallya has held talks with Diageo on United Spirits amid troubles at his cash-strapped Kingfisher Airlines, which had its license suspended following a strike. The airline has said it plans to resume flights shortly after employees agreed to return to work.
A spokesman for United Spirits could not be reached for comment.
