Mumbai, Dec. 20: The Karnataka high court today annulled Vijay Mallya’s stake sale in United Spirits to Diageo, the world’s biggest spirits maker, under the terms of a deal sealed last November.

The order was issued in response to a winding-up petition filed against United Spirits filed by the group’s creditors.

Last year, debt-mired Mallya had signed away control over the Rs 16,000-crore United Spirits Ltd to Diageo.

Under the terms of the deal, Diageo was to acquire a 53.4 per cent stake in USL for Rs 11,166 crore (or $ 2.1 billion) in a three-step process, making it the biggest in-bound merger and acquisition deal since Anil Agarwal’s Vedanta Resources Plc acquired oil and gas explorer Cairn India.

As part of the deal, United Breweries (Holdings) Ltd had sold a 14.98 per cent stake in United Spirits to Diageo on July 4 for Rs 3,134.56 crore.

Earlier, on May 27, Diageo had subscribed to a preferential allotment of new shares in USL amounting to 10 per cent of the post-issue enlarged share capital at a consideration of Rs 2,092.72 crore.

Diageo is now the largest shareholder in United Spirits with a 25.02 per cent stake, much lower than the 53.4 per cent it originally sought, while UBHL and other promoter firms own 11.08 per cent.

The British distiller was to buy the remaining 26 per cent from the public shareholders of United Spirits but the open offer failed.

“We will take all necessary steps to protect Diageo’s interest as well as our own,” Vijay Mallya said today.

“We are awaiting receipt of the detailed written order of the division bench of the Court of Appeal in Karnataka announced in court today. We do not believe that there are any grounds for declaring the sale of the 10,141,437 shares in United Spirits (6.9 per cent of USL) purchased by Diageo on 4 July 2013 from UBHL as void,” a Diageo spokesperson said.

“The judgment is in excess of 150 pages, which requires us to first study it after a copy is made available to us and thereafter consider our options,” UB Group spokesperson Prakash Mirpuri said.

“One of the obvious options that we have is to prefer an appeal before the Supreme Court when it re-opens in January,” Mirpuri added.

The shares of UBHL slid 0.6 per cent to Rs 24.70, while United Spirits nudged up slightly to Rs 2,670.55 apiece on the Bombay Stock Exchange on Friday.

The high court’s verdict came after market hours.