Diageo has agreed to buy a 53.4 per cent stake in Indian liquor baron Vijay Mallya's United Spirits for more than $2 billion, according to an internal memo related to the deal obtained by Reuters.

The purchase marks the biggest inbound Indian M&A deal since British oil firm Cairn Energy's agreed to sell a majority stake in its Indian business to Vedanta Resources last year. The Diageo deal concludes an on-again, off-again courtship that began in 2008.

The purchase would ramp up Diageo's presence in the world's largest whisky market, while Mallya will gain much-needed cash to reduce United Spirit's debt although it may not be enough to revive his grounded Kingfisher Airlines.

The two companies said in September that they were in talks about a possible deal.

Reuters