Diageo to launch open offer for United Spirits on 10 April

 

 

Bangalore: Diageo Plc will launch its open offer to buy 26% of Vijay Mallya-promoted United Spirits Ltd (USL) at Rs.1,440 per share from the public in April after a three-month delay.

With shares of USL trading significantly higher than the offer price, it wasn’t clear if there would be many takers for Diageo’s offer. The United Spirits stock was trading at Rs.1,833.10 at 10.52am on Friday on BSE.

The acquisition is crucial to Mallya, who is expected to use the funds from Diageo towards restarting his grounded Kingfisher Airlines Ltd. Lenders to the debt-laden airline have started selling shares of UB Group companies they held as collateral. Any delay in the Diageo deal would increase the risk of the liquor baron losing more of his assets that have been pledged to bankers against Kingfisher’s loans of Rs.7,000 crore.

The open offer is part of the deal announced in November when Diageo, the world’s largest liquor company, agreed to buy 53.4% of United Spirits. It includes the purchase of a 27.4% stake in United Spirits by Diageo, including 19.3% from Mallya, for £660 million, as well as fresh equity from the firm. The British distiller will buy the remaining 26% stake from the public shareholders of United Spirits.

The open offer will close on 26 April, JM Financial, which is managing the offer for Diageo, said in a filing with the BSE.

The USL-Diageo deal had been held up by the Competition Commission of India (CCI) and the Securities and Exchange Board of India (Sebi) as both the regulators sought more details on the deal structure and anti-trust issues, Mint reported earlier this year. Sebi cleared the transaction in late January and CCI gave its approval at the end of February.

Earlier this week, people familiar with the matter told Mint that the completion of the USL-Diageo transaction would be delayed, possibly by three months. Diageo now “hopes” to complete the acquisition in the quarter to 30 June, one of the sources had said. The UK distiller had previously said that it would close the deal before 31 March.

 

Avinash kumar

PGDM 2nd sem.