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Diageo open offer gets delayed

Mumbai, Jan. 7: Diageo’s open offer to acquire another 26 per cent in United Spirits Ltd (USL) has been delayed as the requisite approval hasn’t come through from the Securities and Exchange Board of India (Sebi).

In a filing with the Bombay Stock Exchange, United Spirits said a “revised schedule of activities” would be intimated in due course.

Under the terms of the draft letter of offer that was submitted to Sebi on November 27 by Diageo Plc and Relay B.V., its wholly owned subsidiary in the Netherlands, the open offer was supposed to open today and close on January 18.

Diageo, the world’s largest spirits company, agreed last October to acquire a 53.4 per cent stake in USL for Rs 11,166 crore (or $2.1 billion), making it the biggest in-bound merger and acquisition deal since Anil Agarwals’ Vedanta Resources Plc acquired oil and gas explorer Cairn India.

The shareholders of United Spirits were offered Rs 1,440 per share in cash under the terms of the open offer through which Diageo intended to acquire a maximum of another 26 per cent. The spirits giant was aiming to acquire a maximum of 37.79 million shares through the open offer.

Sebi’s tardiness forced JM Financial Institutional Securities Pvt Ltd — the manager to the open offer — to push for a delay. It wasn’t clear whether Sebi had any reservations about the terms of the open offer.

A new timeline for the open offer will be announced after the deal receives approval from the capital markets regulator and the Competition Commission of India.

Diageo had struck a two-part deal on November 9 last year with Vijay Mallya to buy out his flagship company.

In the first stage, Diageo was to acquire a 19.3 per cent interest in United Spirits at a price of Rs 1,440 per share from the UBHL group, the USL Benefit Trust, Palmer Investment Group Ltd, UB Sports Management and a company established for the benefit of certain USL employees.

Diageo was supposed to receive a preferential allotment of new shares amounting to 10 per cent of the post-issue enlarged capital at the same price.

 
 
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