The shares of the company were seen trading higher by 3% to Rs 1085 on BSE at 11.40 am IST. It touched intra-day high of Rs 1098.
On Monday, shares of the United Spirits surged on the reports of the stake sale.
"Diageo plc is in discussion with United Spirits Limited and United Breweries (Holdings) Limited in respect of possible transactions for Diageo plc to acquire an interest in United Spirits Limited", company said in the press release.
However, the company said that there is no certainty that these discussions will lead to a transaction.
Earlier there were reports that "Diageo may pay Rs. 3,000 crore for up to 27% stake in United Spirits.
However, these reports were denied by United Spirits stating that "the news item forwarded contains speculative information and it would not be appropriate for us to comment on market rumours."