The Telegraph
Tuesday , May 27 , 2014
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Diageo open offer gets okay

Mumbai, May 26: The Securities and Exchange Board of India has cleared Diageo Plc’s open offer to acquire an additional 26 per cent stake in United Spirits Ltd (USL) worth Rs 11,448.91 crore.

This is the second open offer made by the global liquor giant to acquire a majority control in Vijay Mallya-led UB group’s USL.

The offer, which was made last month, has now been cleared by the market regulator. Sebi had issued the final observations, necessary for the offer and the deal to go through, on May 21.

Diageo will pay Rs 3,030 per USL share, which is more than double the price of Rs 1,440 per share it offered in the previous bid last year.

The shares of USL today ended at Rs 2,795.05, up 0.07 per cent from the previous close of Rs 2,793 on the Bombay Stock Exchange.

The offer for 3,77,85,214 USL shares, being made through Relay BV — a wholly owned indirect subsidiary of Diageo — is another attempt by the company to increase its stake beyond 50 per cent in the flagship firm of the UB Group.

If the offer is fully subscribed, Relay will hold 54.78 per cent of USL’s issued share capital and will have paid about Rs 18,023.14 crore for its total shareholding in USL.

At present, Relay holds 28.78 per cent of USL’s issued share capital, which it acquired for Rs 6,574.22 crore. The open offer is scheduled to start on June 11 and close on June 24.

Diageo, which sells brands such as Smirnoff vodka and Johnnie Walker whisky, had in 2012 announced that it would pick up a 53.4 per cent stake in USL in a multi-structured deal for a total of Rs 11,166.5 crore.

The previous open offer made by Diageo in April last year had met with a lukewarm response from the shareholders of USL.

In fact, of the 3.8 crore shares of United Spirits that were then on offer, only 58,688 shares were accepted.

In January this year, Diageo had acquired an additional 2.40 per cent stake in United Spirits for an estimated Rs 866 crore through open market transactions.