Diageo plc., maker of Johnnie Walker scotch whisky and Smirnoff vodka, has announced an open offer to acquire 26 per cent stake in United Spirits Ltd (USL) from the company’s public shareholders. This is as per Securities and Exchange Board of India’s (SEBI) takeover code.
The company, through its offer manager JM Financials, has come out with a newspaper advertisement offering to buy USL shares from the public at Rs. 1,440 per share, the same price at which it is acquiring 27.4 per cent from Vijay Mallya controlled United Breweries (UB) Group.
USL and Diageo had, on November 9, made a joint announcement stating that the British company would acquire 53.4 per cent stake in Mallya’s company for a total consideration of Rs. 11,166 crore provided the open offer gets fully subscribed.
The tendering period of the open offer will commence on January 7, 2013 and will run until January 18.
USL shares on Tuesday surged to Rs. 1,795.65 in intraday trade to finally close at Rs. 1,762.20, with a gain of 0.54 per cent. USL shares are on a high since the deal has been announced as brokerages have re-rated the stock.
Market analysts believe that Diageo open offer may not succeed as investors would not sell shares at a discounted rate from the market price. In such a scenario Diageo will have to revise the open offer price to increase its holding in USL.