Diageo gets SEBI nod to go ahead with open offer to buy up to 26% more in United Spirits

Diageo Plc, the world’s-largest spirits maker by revenue, has obtained approval from the capital markets regulator Securities and Exchange Board of India (SEBI) for its proposed open offer to acquire additional 26 per cent equity stake in United Spirits. If fully subscribed, the proposed open offer would cost Diageo around Rs 11,449 crore.

The open offer was made last month by Diageo. SEBI issued final observations, necessary for the offer and the deal as a whole to go through, on May 21, as per a public notification.

This is the second open offer by Diageo to gain controlling equity stake in United Spirits, the world’s-largest spirits maker by volume. It seeks to acquire up to 26 per cent stake or 37.78 million equity in the company from the public shareholders at a price of Rs 3,030 a share, which is almost double the previous offer of Rs 1,440 per share it offered last year.

The open offer is scheduled to start on June 11 and close on June 24.

Diageo offered to buy additional 26 per cent stake through its wholly-owned indirect subsidiary Relay BV, which currently owns 28.78 per cent equity stake in United Spirits.

In 2012, it had signed a deal to acquire up to 53.4 per cent of United Spirits, in a multi-tiered transaction worth as much as $2.1 billion. Around 27.4 per cent stake was to be purchased through a mix of preferential allotment and stake purchase from UB Group while the rest was proposed to be acquired through an open offer. However, its open offer failed as investors dismissed the offer price.

United Spirits is India’s as well as the world’s largest liquor company by volume and Diageo -- which sells brands such as Smirnoff vodka and Johnnie Walker whiskey -- has committed over $1 billion in tranches to pick 28.7 per cent stake in the Indian public listed firm.

(Edited by Joby Puthuparampil Johnson)

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